FRANKFURT: European shares slipped in a broader market sell-off on Monday, as global equities faced pressure after US jobs data reinforced bets the Federal Reserve will be cautious in cutting interest rates this year.
The pan-European STOXX 600 was down 0.9% by 0954 GMT, extending its declines following a near 1% drop on Friday when data showed US job growth unexpectedly accelerated in December while the unemployment rate fell to 4.1%. “It’s a tough environment for investors in Europe. (Europe’s) rightfully cheap,” said Chris Beauchamp, chief market analyst at IG Group. “Investors are not in a congenial mood for risk taking.
They are certainly selling first and asking questions later at the moment, and Europe has been caught up in that.” Rate-sensitive technology stocks followed their Wall Street peers lower with a 2.3% decline, while media shed 1.8%.
Adding to the losses, aerospace and defence and heavyweight healthcare lost 1.6% and 1%, respectively. Energy stocks were an outlier, up 0.4% as crude oil prices gained on wider US sanctions on Russian oil and the expected effects on exports to top buyers India and China. European government bond yields remained elevated, in line with US Treasuries. The yield on the 10-year bund hovered near its highest in over six months.
In the UK, yield on the 30-year gilt jumped to a fresh 27-year high, extending the sell-off into a second week. The domestically-focussed FTSE 250 midcap index was down 0.3%.
Concerns over rising inflation, dim chances of deeper rate cuts by the Fed and talks of incoming US President Donald Trump’s strategy on imposing tariffs have kept markets on edge lately. Meanwhile, the European Central Bank chief economist Philip Lane said the top bank can ease policy further this year but must find a middle ground that neither induces a recession nor causes an undue delay in curbing inflation.
Later in the week, inflation figures across the continent, including from the UK and Germany would be in focus, along with a US consumer prices report. Among individual stocks, Entain gained 2% after the British gambling group said it expects core profit for 2024 to be at the top end of its forecast range.
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