September 24, 2023

Europe close: Stocks slip, Travel and Leisure names pace declines

European shares slipped at the end of the week dragged down by Travel and Leisure…

Europe close: Stocks slip, Travel and Leisure names pace declines

European shares slipped at the end of the week dragged down by Travel and Leisure names, amid mounting Covid-19 case counts in many countries, especially in Eastern Europe and Italy.

Adding to the selling pressure, following upbeat data on the US jobs market which took its toll on the region’s stockmarkets due to concerns of further rises in government bond yields, which entice more investors away from equities.

The US Department of Labor reported a 379,000 person increase in non-farm payrolls (consensus: 200,000) and what’s more, Ian Shepherdson at Pantheon Macroeconomics believed monthly gains of even over 1.0m now lay ahead as the economy began to reopen.

In the words of Mickey Levy at Berenberg Capital Markets: “The realities are real bond yields remain below zero, inflation is becoming a concern, the economy is on the verge of reopening and significant strengthening, and there is an unprecedented amount of fiscal and monetary stimulus in the pipeline, and the Biden Administration is adding much much more.”

The pan-European Stoxx 600 was down 0.78{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} at 408.68, after falling almost 1{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} in early trading.

London’s FTSE 100 outperformed, dipping just 0.31{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} thanks to the higher weighting towards value of its components.

But the German Dax fell 0.97{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} to 13,920.68 and Spain’s Ibex 35 gave back 0.80{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} to 8,286.8.

The worst performing sector on the Stoxx 600 was Travel and Leisure, which retreated by a very hefty 4{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5}, alongside a 1.82{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} drop in another gauge for Technology, with the latter the main victim of rising bond yields.

Limiting the downside, Banks added 1.0{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} and Oil&Gas added 0.69{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5}, helped by improved prospects for the global economy.

US and Asian markets fell overnight after US Federal Reserve chairman, Jerome Powell, said that while the rise in yields was “notable”, he did not consider it “disorderly” or that it would push long-term rates high enough for the Fed to intervene.

“The markets wanted hints as to what the central bank would do if the situation worsens, and when that didn’t materialise, equities took a hit,” said Spreadex analyst Connor Campbell.

Oil prices climbed to their highest level in nearly 14 months on Friday after the Organisation of Petroleum Exporting Countries (OPEC) and its allies agreed to maintain their supply cuts for April. Shares in BP and Royal Dutch Shell were higher on the news.

Brent crude rose to as much as $69.15 a barrel.

In equity news, shares in London Stock Exchange Group fell 14.4{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} despite posting steady full-year results for 2020 and announcing a 7{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} increase in the dividend.

ArGEN-x shares fell 5.5{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} after the biotech firm missed fourth quarter earnings and revenue estimates.

Banks were the top performers, with Standard Chartered, HSBC, NatWest and Barclays all higher.