European stocks rallied off session lows on Wednesday after US Federal Reserve chair Jerome Powell told a US Senate committee that the country’s central bank is “strongly committed” to bringing down inflation.
Analysts said markets took heart from the lack of surprises in the comments.
The pan-European STOXX 600 closed down 0.7 per cent, after having fallen earlier in the session 1.8 per cent to its lowest since January 2021.
DUBLIN
The Iseq index lost 1 per cent to 6,369.73, with construction-related stocks out of sorts as investors continued to digest a disappointing trading statement from Kingspan earlier in the week that pointed to a decline in orders for its insulation products.
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Kingspan lost 4.6 per cent to €56.36, while CRH traded down 1.6 per cent to €32.27.
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However, banking stocks generally moved higher, with AIB advancing 0.6 per cent to €2.57, while Bank of Ireland traded up 2.2 per cent to €6.67, on the back of positive comments from analysts from Deutsche Bank on their earnings outlook amid rising central bank rates.
LONDON
The FTSE 100 LOST 0.9 per cent traders digested another 40-year-high for UK inflation levels, with the latest data showing that consumer prices were soaring 9.1 per cent in May
Michael Hewson, chief market analyst at CMC Markets UK, said: “The fragile nature of this week’s rebound has been laid bare today, with a sharp slide in oil prices in Asia, spilling over into broader market weakness, with the Dax sliding below last week’s lows, before rebounding, while the FTSE has also slipped back sharply.
“Today’s inflation numbers from the UK came across as rather mixed in the same way as the US inflation numbers a couple of weeks ago, with core prices softening, however PPI prices continued to push higher, suggesting that there is still a lot of price pressure still in the pipeline.”
Concerns over these pressures in the production sector weighed on commodity stocks, pulling Glencore, Antofagasta and the oil majors lower.
In company news, JD Sports investors had a positive day after the high street retailer unveiled plans to overhaul its corporate governance and internal controls as it looks to “draw a line in the sand” after the departure of its long-term boss and a string of competition probes.
Interim bosses unveiled an 18-month plan as the group also revealed a record annual profit. Shares jumped by 6.6 per cent as a result.
Meanwhile, Natwest climbed 3 per cent after the UK government confirmed it extended its plan to sell off more of its stake in the banking firm by a year.
The price of oil slid to new monthly low amid concerns that a demand recovery in Asia could take longer than previously expected. Brent crude decreased by 3 per cent to $111.27 per barrel when the London markets closed.
EUROPE
Germany’s DAX dropped 1.1 per cent as BASF slid 5.8 per cent after the German chemical group’s chief executive said the company is likely to face a considerable downturn early in the second half of the year.
European steel companies such as ArcelorMittal, Voestalpine and Salzgitter fell in the range of 13.1 per cent and 11.1 per cent after JP Morgan analysts downgraded the stocks, saying steel prices are yet to bottom.
Norway’s Mowi tumbled 7.3 per cent after Groupe Bruxelles Lambert sold a 3.5 per cent stake in the world’s largest fish farmer.
NEW YORK
US stock indexes were ahead in early afternoon trading as investors mulled Mr Powell’s comments.
Wall Street has been whipsawed in recent sessions as traders debate if the market has found a bottom in the wake of a sharp sell-off on concerns that aggressive policy moves by central banks
Rate-sensitive growth and technology stocks climbed. Microsoft and Amazon.com rose to lead the Nasdaq higher.
Dow slid 5.2 per cent after Credit Suisse downgraded the chemicals maker’s stock to underperform.
Declining issues outnumbered advancers for a 1.07-to-1 ratio on the NYSE. Advancing issues outnumbered decliners for a 1.12-to-1 ratio on the Nasdaq.
— Additional reporting, Reuters, Press Association
