European stocks slump over supply-chain concerns

European stocks slumped to their lowest in two months on Friday as warnings from companies and factory activity data highlighted the economic headwinds from supply-chain constraints and elevated prices.

DUBLIN

The Irish index of shares ended the week in positive territory, gaining half a per cent on Friday to close at 8448.

Among the top gainers on the market was Ryanair, which saw shares climb almost 5 per cent to close at €17.14. The airline gained back ground after losing 3 per cent in Thursday's trading.

Banking stocks took a hit, with AIB down marginally to €2.345, while Bank of Ireland fell almost 2.5 per cent to end the week at €4.981.

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Smurfit Kappa stock slipped 2.2 per cent to €44.35, with construction stocks also feeling the pinch. CRH was marginally off at €40.19, with Glenveagh falling to €1.092, a 1.27 per cent decline, and Cairn Homes ending almost 2 per cent off at €1.118.

Among the index's smaller stocks, hotel group Dalata continued its momentum from Thursday, gaining 6.7 per cent over the session to close at €4.375.

LONDON

British mid-cap stocks closed on two-month lows on Friday as warnings from electrical goods retailer AO World and pub operator J D Wetherspoon stoked concerns around supply-chain disruptions and higher energy prices.

The domestically-focussed mid-cap index ended 0.3 per cent lower to record its worst week since October last year, hurt by declines in travel and leisure stocks.

The blue-chip Ftse 100 index lost 1.0 per cent as a stronger pound pressured the dollar earners on the index.

AO World plunged 24.3 per cent after first-half revenue was hit by a shortage of delivery drivers, while Wetherspoon gained 2.5 per cent despite a near doubling in its annual losses.

For the year so far the FTSE 100 is up nearly 9 per cent and the mid-cap FTSE 250 index 11 per cent on support from reopening optimism and easy central bank policies.

However, a rise in cost pressures from supply-chain disruptions and higher energy prices have weighed on UK’s economy, putting the mid-cap index on track to post its fourth consecutive weekly decline.

Among other stocks, software company Sage fell 1.3 per cent after saying it will cut more than 800 jobs across the world.

GlaxoSmithKline dropped 1.3 per cent after ending collaboration with Germany's Merck KGaA on cancer treatment.

EUROPE

The Europe-wide Stoxx 600 index fell 0.4 per cent in a weak start to October, which has traditionally been a rough month for equities, with technology, miners and banks leading broad declines. The Stoxx 600 ended the week with declines of 2.2 per cent.

A survey showed euro zone manufacturing growth remained strong in September but activity took a big hit from supply-chain bottlenecks that are likely to persist and keep inflationary pressures high.

BMW rose 1.3 per cent after lifting its annual profit margin forecast as higher prices for new and used vehicles outweighed the effect of supply-chain issues.

French state-owned utility EDF and energy group Engie rose 5.9 per cent and 2.5 per cent respectively, with traders pointing to relief that electricity tariffs were untouched by the government in its plan to check further price rises.

France's biggest telecoms group Orange fell 0.8 per cent after it said it would buy insurer Groupama's 21.7 per cent stake in Orange Bank, its online banking unit.

NEW YORK

The Dow and the S&P 500 oscillated between gains and losses on Friday as investors weighed a warning from Fitch over the United States' debt ceiling against drugmaker Merck's progress in developing an oral Covid-19 drug.

Shares of Merck & Co jumped 9.5 per cent and were the top boost to the Dow after positive trial data for the company’s experimental oral drug for Covid-19, molnupiravir.

Other Covid vaccine-makers Moderna and Pfizer slid 11.6 per cent and 1.1 per cent respectively after the news. The wider S&P healthcare sector fell 0.4 per cent.

Bargain buying into beaten-down technology shares supported the Nasdaq. The index, along with the S&P 500, was nursing its worst month since the onset of the coronavirus crisis.

Markets turned lower in early trading after Fitch warned that extended bipartisan wrangling over raising the government’s spending cap could put pressure on the United States’ ‘AAA’ credit rating.

By noon the Dow Jones Industrial Average was up 234.65 points, or 0.69 per cent, at 34,078.57, the S&P 500 was up 19.63 points, or 0.46 per cent, at 4,327.17, and the Nasdaq Composite was up 10.39 points, or 0.07 per cent, at 14,458.97.

– Additional reportingL Reuters