European stocks slip as US bond sales struggle amid concerns over Fed rate cuts

US and European indices retreated on Wednesday, as concerns around the timing and scale of the Federal Reserve’s interest rate cuts pushed Treasury yields higher and put stocks under pressure.

Dublin

Performing broadly in line with other European indices, the Iseq fell 1.3 per cent on Wednesday, largely due to a sharp decline in Ryanair’s share price through the session.

The airline shed more than 4.1 per cent to close at €17.20 per share, with losses gaining momentum as the session wore on, traders in Dublin said.

Airlines are in the spotlight at the moment after American Airlines on Tuesday evening cut its share price and margin outlook for the second quarter and announced the departure of its chief commercial officer, Vasu Raja.

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Ryanair’s UK peers EasyJet and Aer Lingus owner IAG also slumped in the session, albeit at a slower pace of 1.6 per cent and 2.5 per cent, respectively.

Irish banks, meanwhile, were softer on the day, with Bank of Ireland down by more than 1 per cent to €10.28 per share despite announcing new higher-rate deposit accounts on Wednesday morning. AIB shed 2.1 per cent to close at €5.05 per share.

Under pressure of late, Greencoat Renewables declined another 2.8 per cent to 87 cent per share while home builders Glenveagh and Cairn Homes were also softer on the session, down 0.4 per cent and 2.1 per cent, respectively.

London

London stocks edged lower on Wednesday after higher US bond yields pressurised equities globally. The blue-chip FTSE 100 index was down 0.9 per cent while the mid-cap FTSE 250 fell by 1.1 per cent.

Among the few stocks to buck the trend was Distribution Services, which gained 4.3 per cent after the Royal Mail owner agreed to a £3.57 billion (€4.2 billion) takeover offer by Czech billionaire Daniel Kretinsky.

Oil majors Shell and BP were another bright spot in an otherwise dismal session, adding 0.8 per cent and 0.4 per cent, respectively, as oil prices advanced.

There were big declines for others including Ocado. The online grocer cemented its relegation to the FTSE 250 after slipping another 12.3 per cent in trading on Wednesday.

Industrial and precious metal miners also tumbled, with Anglo American and Antofagasta down 3 per cent and 1.8 per cent while Rio Tinto shed 1.9 per cent.

Europe

Europe’s main equities indices slipped with the Stoxx 50 down 1.3 per cent and the pan-European Stoxx 600 down by just over 1 per cent amid jitters over the expected trajectory of European interest rates.

German inflation rose slightly more than forecast to 2.8 per cent in May, although economists said an increase had been expected and should not alarm European Central Bank policymakers in advance of their interest rate decision next week.

[ ECB rate cut next week will not be ‘victory declaration’ on inflation, Lane says ]

Europe’s main equities indices slipped, with the Stoxx 50 down 1.3 per cent and the pan-European Stoxx 600 down by just over 1 per cent amid jitters over the expected trajectory of European interest rates.

France’s Cac 40 index was the worst performing regional index, shedding more than 1.4 per cent as luxury brands such as Kering declined. The Gucci owner fell by 2.3 per cent to near the bottom of the Stoxx 50 while rival luxury stable LVMH also shed 2.8 per cent. Jameson owner Pernod Ricard also declined by 2.4 per cent while Ray-Bans owner Essilor Luxottica slid 1.6 per cent.

New York

Wall Street’s main indices came under pressure, with traders on high alert before a $44 billion (€40.7 billion) sale of US Treasury notes that follows two weak auctions this week.

The S&P 500 was down by close to 0.7 per cent by closing bell in Dublin, with all of its main sectors losing ground. American Airlines tumbled 15 per cent after a disappointing outlook while UnitedHealth led industry losses after citing a “disturbance” in Medicaid. Marathon Oil, meanwhile, surged after ConocoPhillips agreed to acquire the company in a $17 billion deal.

The tech-heavy Nasdaq retreated after closing above the 17,000 mark for the first time on Tuesday. Chip stocks, which drove gains in the last session, were down 1.9 per cent.

– Additional reporting: Bloomberg, Reuters

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