European shares fall to one-month low as oil stocks slide, Pearson plummets

Europe’s Stoxx 600 index closed at its lowest level in nearly a month on Tuesday at the beginning of a shortened week packed with high-profile central bank events as energy stocks slumped and education publisher Pearson led falls among media companies.

The pan-European STOXX 600 index fell 1.2 per cent, closing at its worst level since early April.

Oil and gas stocks slid as the price of oil dropped 4 per cent as investors fretted about the prospect of a US debt default as soon as next month if lawmakers do not agree to raise or suspend the country’s debt ceiling.

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The Iseq All Share index declined by 0.5 per cent at 8,388.42.

CRH, the building materials giant hoping to benefit from a massive US infrastructure programme, lost 1.3 per cent to €43.22 amid concerns about the US debt situation.

However, banking stocks were generally higher as investors welcomed a positive trading update from Permanent TSB (PTSB), which analysts say bodes well as the other two remaining Irish banks issue statements this week. AIB added 0.5 per cent to €3.92 and Bank of Ireland advanced 0.7 per cent to €9.43. However, PTSB ended the session down 0.4 per cent at €2.26, having earlier traded higher.

Greencoat Renewables was also in focus, down 0.2 per cent at €1.08, as investors mulled a trading update from the renewable energy company.

LONDON

London’s FTSE 100 reversed early gains to end the session lower as a slump in energy firms outweighed strong earnings from Europe’s biggest lender, HSBC, in the first quarter.

HSBC advanced 3.5 per cent, touching a near two-month high as it also announced its first quarterly dividend since 2019.

BP slumped 8.6 per cent and clocked its worst day in more than three years after paring back its share buyback programme.

Online education firm Pearson tanked 15 per cent, marking its worst daily loss in more than six years after US rival Chegg issued a lower forecast, warning on tough ChatGPT competition.

Restaurant Group jumped 14.3 per cent after the small-cap name said it expects profit margins to improve in the medium-term.

EUROPE

Markets also keenly awaited a rate decision by the European Central Bank (ECB) on Thursday, where it is widely seen hiking by quarter of a percentage point. Derivatives markets also see ECB deposit rates peaking at about 3.7 per cent in November, compared with 3 per cent, currently.

Logitech climbed 7 per cent to the top of the Stoxx 600 index after the computer peripherals maker reported better-than-expected quarterly results.

NEW YORK

US stock indexes were lower in early afternoon trading, led by banks and energy shares, as investors were worried about the impact of further interest rate hikes on the US economy and banking system – and as they kept an eye on the debt ceiling.

The Federal Reserve is widely expected to raise interest rates by quarter of a point to a range of 5-5.25 per cent, its highest level in nearly 16 years, when the central bank concludes its two-day policy meeting on Wednesday.

Investors are waiting to see if the Fed will signal that this week’s rate increase is the last, at least for now.

US regional banks fell further in the wake of the collapse of First Republic Bank, most of whose assets were bought by JP Morgan in a deal brokered by the Federal Deposit Insurance Corp on Monday.

PacWest Bancorp, Western Alliance Bank and Comerica were all out of sorts.

Oil prices dropped nearly 5 per cent on worries of a potential US debt default, dragging the S&P 500 energy index by as much 5 per cent.

Uber Technologies rose as the ride-hailing firm forecast quarterly core earnings above estimates. Smaller rival Lyft also climbed.

Educational services company Chegg lost almost half of its value in early trading on a downbeat second-quarter revenue forecast on increasing competition from ChatGPT.

– Additional reporting Reuters