Fears of global recession and interest rate hikes send shares into freefall

European shares fell on Wednesday, as fears about a global recession deepened after chiefs of the European Central Bank and US Federal Reserve stuck to their hawkish stance.

In the US, the S&P 500 and the Nasdaq were flat in volatile trading on those worries over faster interest rate hikes even as recent data painted a dour picture for the economy, while a boost from Goldman Sachs shares kept the Dow afloat.

DUBLIN

The Iseq closed down 1.5 per cent, dragged into the red by the pillar banks and poor performances from its other most weighted stocks. Worries over the trajectory of the economy weighed on the banks. AIB finished the session down more than 3 per cent to €2.29 per share, while Bank of Ireland was down 1.3 per cent to €6.21.

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Despite a trading statement in which it said the recovery was exceeding expectations, it seems some investors were hoping for even more from hotel group Dalata. It fell 4.5 per cent to €3.70.

Fears of a global recession and further interest rate hikes sent Glanbia plunging. The group, which has a substantial consumer business in the US, tumbled by 6 per cent to €10.24.

LONDON

Britain’s top share index, the blue-chip FTSE 100, closed 0.2 per cent lower in choppy trading.

Miner Anglo American and drinks maker Diageo dropped 1.7 per cent and 2.8 per cent, respectively, after Deutsche Bank cut its ratings.

Further losses were limited by gains in drugmakers AstraZeneca and GSK, boosting the broader healthcare sector by 2 per cent.

United Utilities and National Grid rose 2 per cent and 0.8 per cent, respectively, after British energy regulator Ofgem proposed a £20.9 billion pounds package to boost grid capacity.

Shares of Lookers jumped 3.2 per cent after the automotive aftersales company hiked its full-year outlook on the back of vehicle shortages.

Shoe Zone also had a particularly strong session. The value shoe seller told shareholders it expects to post adjusted pretax profits of roughly £8.5 million for the financial year after strong improvement in margins and increased cost savings.

Luxury car manufacturer Aston Martin reversed over reports the business is seeking to raise new funds in a bid to safeguard its future and ramp up its investment potential. Shares in the Lawrence Stroll-backed company fell by 52.2p to 480.2p.

EUROPE

The continent-wide Stoxx 600 index dropped 0.7 per cent, snapping a three-day rally. It has shed 15 per cent this year and is set for its worst quarter since the Covid-19 led carnage in 2020, as uncertainty about the Russia-Ukraine war, soaring price pressures and central bank policy moves to dampen risk appetite.

Losses were broad-based, led by property and auto sectors, which fell 3.5 per cent and 2.6 per cent respectively. Banks and miners were among the other big drags. Germany’s Dax was down 1.7 per cent following a three-day rally.

Spain’s blue-chip index Ibex fell 1.6 per cent, as preliminary data showed Spanish 12-month inflation accelerated to a higher-than-expected 10.2 per cent in June, the first time since April 1985, from 8.7 per cent in the previous month.

Swedish group H&M gained 2.2 per cent after the world’s second-biggest fashion retailer reported a forecast-beating 33 per cent increase in quarterly profit.

NEW YORK

General Mills, the maker of Cheerios cereal, climbed after saying price increases and easing supply-chain disruptions will buoy sales. Carnival slumped as Morgan Stanley warned that the cruise holiday firm’s shares could lose all their value in the event of another demand shock. Bed Bath & Beyond also plunged as the home-goods retailer reported disappointing results.

Goldman Sachs Group rose 1.3 per cent, boosting the blue-chip Dow Jones Industrial Average, after BofA Global Research upgraded the investment bank to “buy” from “neutral”, saying it was well-positioned to outperform in a likely worsening economic environment.

(Additional reporting: Bloomberg/PA/Reuters)