Make Kitco Your Homepage

European stocks slump following Wall Street rout on rate worries

Kitco News

May 12 (Reuters) - European stocks slumped on Thursday, echoing sharp losses on Wall Street overnight, after U.S. inflation data fuelled worries about the impact of rising interest rates on economic growth.

The continent-wide STOXX 600 index (.STOXX) slid 1.7%, reversing much of the mid-week gains. Technology (.SXPP), automakers (.SXAP) and mining (.SXPP) stocks were the top losers among sectors.

U.S. tech-heavy index Nasdaq (.IXIC) tumbled over 3% on Wednesday as investors bet on bigger rate hikes by the Federal Reserve after consumer prices moderated in April but increased more than economists' expectations. read more

"We expect inflation data to remain a central concern for both policymakers and investors over the coming months," Mark Haefele, chief investment officer at UBS Global Wealth Management said in a note.

"Rapid wage growth and strong demand could result in sustained price increases for services, forcing the Fed to continue raising rates even if goods prices stabilize."

Worries about monetary policy tightening, economic slowdown in China and surging inflation have stoked worries about recession, pushing the STOXX 600 to shed 6.7% so far in May even thought first-quarter earnings have been largely supportive.

Adding to worries, Russian gas flows to Europe via Ukraine fell by a quarter after Kyiv halted use of a major transit route, the first time exports via Ukraine have been disrupted since the invasion. read more

A volatility gauge of euro zone stocks (.V2TX) rose to above 33 points.

Commerzbank (CBKG.DE) dropped 1.7% despite confirming its full-year net profit target of more than 1 billion euros.

Siemens (SIEGn.DE) fell 4.5% after it said it will quit the Russian market due to the war in Ukraine, taking a 600 million euros ($630.18 million) hit to its business during the second quarter. read more

Franco-Italian chipmaker STMicroelectronics gained 2.4% even as it forecast more than $20 billion in annual sales by 2027 at the latest. read more

Britain's biggest broadband and mobile operator BT (BT.L) rose 2.8% after saying it had finalised the deal to combine its sports broadcasting unit with Discovery Inc , as it met expectations for annual core earnings. read more

Analysts now expect profit for STOXX 600 companies to grow 42.4%, as per Refinitiv data, up from 20.8% seen at the start of the earnings season. Nearly 65% of the European companies have reported so far.

Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.