Markets lose momentum after Christine Lagarde’s latest rates warning

Global stocks gave up some of the momentum built over recent sessions on Thursday as recession fears and interest rate concerns returned to sap confidence.

European Central Bank President Christine Lagarde’s hawkish comments at Davos put a dampener on the continent’s benchmarks in trading. Ms Lagarde said markets should ditch their view that the central bank would soon slow down its rate rises in response to signs that euro-zone inflation has peaked.

“I would invite [financial markets] to revise their position; they would be well advised to do so,” she told a panel.

Dublin

The Iseq index gave back three quarters of a per cent on Thursday, slightly outperforming its European peers thanks to the performance of some the larger cap companies like Flutter Entertainment and Ryanair.

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Paddy Power owner Flutter added 1.3 per cent to close at €140.75 per share, carried along by a sectoral move in the gaming and entertainment industry. Traders in Dublin said the sector was buoyed by reports earlier in the day that Coral and Ladbrokes owner Entain has accelerated its plans to exit a number of unregulated markets where it no longer sees a path to domestic regulation.

Ryanair, meanwhile, was up by 0.1 per cent after group chief executive Michael O’Leary’s comments earlier in the week that the airline sees no signs of a recession just yet.

Moving in the opposite direction, insulation giant Kingspan followed other Irish and UK light industrials and construction-adjacent companies lower. The Cavan-based company shed 5.6 per cent to finish the session at €56.74 while CRH gave up 1.4 per cent to close out the day at €41.15 per share.

Cairn Homes, down more than 1 per cent to 98c per share, also showed some softness while housebuilder Glenveagh, up more than 2 per cent also to 98c, managed to buck the broader trend.

London

UK’s commodity-heavy FTSE 100 fell on Thursday, with energy firms and material stocks dragging the benchmark index lower, while shares of bootmaker Dr Martens slumped to a record low after its annual profit warning. The company sank as much as 23.6 per cent, after it warned of a lower annual profit and revenue due to operational issues at its new US distribution centre. The stock dragged the personal goods sector down 4.1 per cent.

The FTSE 100 slid 0.6 per cent, while the domestically-oriented FTSE 250 shed 1 per cent.

Energy heavyweights Shell and BP fell between 1 and 1.7 per cent, while industrial miners shed almost 2 per cent as crude and copper prices declined after disappointing US economic data and on worries about a hawkish Federal Reserve.

Europe

European financial markets tumbled after Lagarde disabused investors of any notion that Frankfurt is ready to pivot away from raising rates.

The Europe-wide Stoxx Europe 600 fell 1.3 per cent, with all sectors in negative territory, snapping its longest streak of gains since November 2021, dropping the most in a month. Germany’s Dax and France’s Cac 40 both lost 1.4 per cent.

Energy and exploration stocks fell for a second day. Swedish explorer Orron Energy fell as much as 9 per cent, French energy company TotalEnergies shed 1.7 per cent and German utility Uniper tumbled 2.6 per cent.

[ ECB to ‘stay the course’ on high interest rates, Lagarde warns ]

New York

US stock indexes fell on Thursday as worries about a looming recession crept into the foreground of the earnings season, while shares of Procter & Gamble fell after the company warned of cost pressures.

Fears of the Federal Reserve’s sharp interest rate hikes slowing the economy were fanned by weak retail sales and manufacturing data on Wednesday, with the S&P 500 and the Dow logging their biggest daily percentage declines in over a month.

Retailers and consumer discretionary stocks were among the leading decliners on the S&P 500, down 1.1 per cent and 0.9 per cent respectively.

Weighing on the Dow, American Express, the only big card company with credit exposure and highly sensitive to rate hikes, fell 3.7 per cent.

Procter & Gamble Co fell 1 per cent after warning of commodity costs pressuring profits, despite raising its full-year sales forecast.

Tesla fell 1.8 per cent, leading declines among its growth peers Apple, Amazon and Microsoft whose shares were down between 0.7 per cent and 1.4 per cent. – Additional reporting: Bloomberg, Reuters, PA