Shares fall amid renewed concern rates could stay higher for longer

European shares fell on Friday as concerns that global interest rates could stay elevated for longer took centre stage, while UBS shares jumped after the Swiss lender ended a state guarantee granted for its takeover of Credit Suisse.

Investors were also concerned about the likelihood of slowing global economic growth and the possibility of further rate rises from the European Central Bank.

Dublin

The Iseq Overall Index ended the week almost 1.5 per cent lower, dragged down by dips in banking shares, construction stocks and index heavyweights.

AIB and Bank of Ireland both saw their shares fall, mirroring movements on the wider global stage. AIB shed almost 2.6 per cent to close at €4.24, while Bank of Ireland ended the day at €9.44, off almost 1.7 per cent.

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Kerry Group and Glanbia saw their shares lose more than 1.7 per cent and 1.3 per cent respectively, while Paddy Power-owner Flutter Entertainment shed almost 2.6 per cent to close at €166.05.

Insulation specialist Kingspan was a little of the pace at €74.92, with CRH losing more than 1 per cent to finish the week at €52.76.

One bright spot was FBD, which saw its shares rise 0.4 per cent by the closing bell. Earlier on Friday the board approved payment of a special €35.8 million dividend to shareholders in October as pretax profits at the insurer surged in the first half of the year. The insurer said it had received final judgment on outstanding issues in relation to a High Court test challenge on Covid business interruption claims mounted by a small number of pubs in 2020.

London

UK’s FTSE 100 fell on Friday in a broad-based sell-off after data showing the British economy registered unexpected growth in the second quarter, raising speculation of more interest rate hikes from the Bank of England.

The export-oriented FTSE 100 shed 1.2 per cent, coming off its highest closing level in a week hit in the previous session, while the more domestically-focused FTSE 250 fell 1 per cent.

Among individual stocks Tesco dipped 1.4 per cent after the supermarket group said it would reduce the number of branded items in key product areas in its convenience stores.

Bucking the trend shares of EMIS surged 25 per cent after Britain’s competition regulator said it has provisionally cleared UnitedHealth Group’s £1.24 billion acquisition of the healthcare technology firm.

Europe

The pan-European Stoxx 600 dropped 1.1 per cent, with rate-sensitive technology and real estate stocks leading the decline, down about 2.1 per cent each.

The benchmark STOXX 600 was flat on the week as upbeat earnings were countered by a rout in European banks earlier this week following Italy’s shock decision to hit banks with a windfall tax.

Among risers Switzerland’s biggest bank UBS added 4.7 per cent after it said it won’t need the government guarantee it secured to rescue failing rival Credit Suisse.

German IT firm Bechtle was up 6.4 per cent after reporting better-than-expected second-quarter results.

Shares of luxury giants such as LVMH and Richemont, which had posted robust gains in the previous session, fell 1.7% and 2.8% respectively, further dragging on the benchmark index.

US

Wall Street fell on Friday as rate-sensitive technology and growth stocks dropped after hotter-than-expected producer prices data for July sent US bond yields higher.

Tesla, Nvidia and Apple lost between 0.4 per cent and 1.8 per cent.

At 09.48am ET, the Dow Jones Industrial Average was down 34.32 points, or 0.10 per cent, at 35,141.83, the S&P 500 was down 19.21 points, or 0.43 per cent, at 4,449.62, and the Nasdaq Composite was down 101.36 points, or 0.74 per cent, at 13,636.63.

The tech-heavy Nasdaq and the S&P 500 were on track to end their second week lower due to a drop in megacap growth and technology stocks that have led outsize gains this year.

US-listed shares of Chinese companies Alibaba and JD.com fell 3.0 per cent and 5.4 per cent, respectively as Beijing’s latest stimulus measures disappointed investors, while fresh data showed that the country’s post-pandemic recovery was losing steam. – Additional reporting: Reuters