European stocks slide to 3-week lows on COVID surge and rate hike fears

The DAX chart of the German stock index is pictured on the stock exchange in Frankfurt, Germany on November 22, 2021. REUTERS / Staff

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  • STOXX 600 poised for worst day in nearly two months
  • Tech stocks lead to losses, volatility increases
  • Euro zone: surprisingly strong growth in November

November 23 (Reuters) – European stocks fell to a three-week low on Tuesday and were forecast for their worst session in nearly two months as the mood at risk escalated amid a resurgence of COVID cases -19 and concerns about rising rates.

The pan-European STOXX 600 (.STOXX) lost 1.3%, dragged down by a 2.7% drop in technology stocks (.SX8P) as prospects for a high rate environment shook the sector’s attractiveness to high increase.

US President Joe Biden on Monday asked Jerome Powell to continue chairing the Fed, lifting bets on US rate hikes in 2022. Money market traders have now fully integrated a 10-point rate hike. base by the European Central Bank in December 2022, up from 50% odds on Monday.

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“What is happening in the United States affects the world, and in particular European companies that import from the United States,” said Charalambos Pissouros, head of research at JFD Group.

“The reason tech stocks are affected the most is that high growth companies tend to be valued based on discounted future cash flows, and therefore, higher rates mean lower current values ​​faster.” , said Pissouros.

Growing nervousness around a fourth wave of COVID-19 infections that is blocking European recovery at a time when central banks anticipate the withdrawal of monetary support has also pulled investors out of equities.

The Euro STOXX 50 volatility index (.V2TX), the main indicator of stock market anxiety in Europe, reached its highest level in nearly seven weeks.

One-off events or corporate-related headlines, like with Telecom Italia yesterday, cannot last too long, nor overshadow concerns about increasing COVID cases, new lockdowns and growing economies Europeans, “said Pissouros.

The IHS Markit survey showed that euro area business growth accelerated unexpectedly this month, as price pressures soared again. Read more

Meanwhile, travel inventories (.SXTP) fell 1.4% after the United States issued an advisory against movements to Germany and Denmark due to the increase in COVID- cases. 19, while oil stocks (.SXEP) slipped 0.9%, following lower crude prices on growth expectations that the United States, Japan and India will release crude reserves to control prices. Read more

Thyssenkrupp (TKAG.DE) fell 6.2% after Swedish activist fund Cevian nearly halved its stake in the German conglomerate. Read more

UK online retailer of electrical appliances AO World slipped 24.6% after slashing its earnings outlook for fiscal 2022 citing supply chain issues.

Dutch financial services firm Intertrust (INTER.AS) jumped 14.6% to its highest level in more than five years after it said it received several takeover offers.

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Reporting by Anisha Sircar in Bangalore; Editing by Shailesh Kuber and Saumyadeb Chakrabarty

Our standards: Thomson Reuters Trust Principles.

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