Markets weaken ahead of ECB decisions on policy

Stocks fell as investors prepared for the European Central Bank to wind down asset supports this week ahead of next month’s likely interest rate hike.

DUBLIN

Ryanair Holdings fell 3 per cent to €13.425 after London-listed rival Wizz Air predicted that airport labour shortages, air traffic disruption and a volatile economic environment would leave it with a first-quarter loss. The mainly eastern Europe-focused carrier did not give further guidance for the year.

Dealers said the news hit most airlines, including the Irish giant, on Wednesday. Reports later also indicated that Ryanair could face industrial disruption in Spain and several other countries this summer. Otherwise, they noted that “generally directionless markets” left other leading Irish stocks drifting down.

Packaging maker Smurfit Kappa fell 2.67 per cent to €36.81. Index heavyweight, building materials group CRH ended 1.96 per cent off at €37.815. Paddy Power-owner Flutter Entertainment was named as the only Irish stock to be included in the new Euronext Tech Leaders index, designed to boost interest in technology shares. It dipped 0.33 per cent to €106.60.

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Among smaller stocks, dealers said that the banks had a good day. AIB added 2.43 per cent to €2.534. Its peer Bank of Ireland added 0.8 per cent to €6.33. Investors expect this summer’s interest rate hikes to benefit lenders.

Hotel Group Dalata climbed 2.75 per cent to €4.295. That stock often mirrors airline and travel shares, but dealers pointed out that Wednesday’s aviation woes were limited to that industry. “People are looking at the more general backdrop,” said one. “Any reports or data show that in capital cities hotels are doing extremely well.”

LONDON

Low-cost airline Wizz fell 9.46 per cent to 2,499 pence sterling after warning that industry bottlenecks would leave it with a first-quarter loss. The news dragged down Easyjet, a key Ryanair rival, which closed 1.95 per cent off at 478.5p.

However, Aer Lingus and British Airways owner, International Airlines Group, escaped almost unscathed, dipping just 0.08 to end the day at 124.14p.

Irish DIY and builders’ merchant, Grafton Group, shed 1.25 per cent to close at 924.3p. The group, owner of the Woodies DIY chain, is listed in London.

Standard Chartered fell 1.6 per cent to 612.8p after chief executive Bill Winters predicted that central banks’ fight against surging inflation, driven by structural cost pressures such as wage growth, would result in a “relatively shallow and short” recession by early next year.

EUROPE

Air France KLM tumbled 4.35 per cent to €1.65 as airlines took a battering following a warning of likely quarterly losses at Wizz Air. German rival Lufthansa retreated 3.13 per cent to €6.40.

Investors expect the European Central Bank on Thursday to lay the groundwork for rapid rate rises. Money markets ramped up bets on Wednesday to price in 75 basis points, three-quarters of 1 per cent, of hikes from the ECB by September.

NEW YORK

US stocks fell after a two-day rally and oil continued its relentless rise, fuelling worries about inflation and measures by central banks to contain it.

The S&P 500 slid to session lows as declines spread to nine of the 11 major sectors. The tech-heavy Nasdaq 100 dropped 0.8 per cent after rising as much as 0.5 per cent. The losses deepened as the Securities and Exchange Commission chief previewed overhauls to market rules in the agency’s most direct response yet to last year’s wild trading in GameStop and other meme stocks.

US consumer price index figures on Friday could show inflation picked up in May from a month earlier, while slowing slightly from a year earlier but staying above the 8 per cent level. That’s likely to keep pressure on the Fed to stick to aggressive rate hikes. – Additional reporting: Bloomberg/Reuters