European Shares Slip As Rate Worries Return To Haunt Investors

European Shares Slip As Rate Worries Return To Haunt Investors

March 15, 2023

European stocks fell on Wednesday to extend losses from the previous session after hawkish messages from the U.S. Federal Reserve and the European Central Bank.

It is now believed that the Fed would revert to a 50-basis point rate hike at the March 21-22 policy meeting instead of 25 bps expected earlier. The ECB has already flagged rate increase of 50 bps in March.

The dollar climbed to three-month highs and the U.S. yield curve inverted further, denting demand for riskier assets.

The pan European STOXX 600 was down 0.2 percent at 459.66 after declining 0.8 percent on Tuesday.

The German DAX was marginally lower, while France’s CAC 40 and the U.K.’s FTSE 100 both eased around 0.2 percent.

Admiral Group shares fell nearly 5 percent. The British financial services provider proposed a lower dividend for the year after reporting a sharp fall in profit.

Hill & Smith, a provider of infrastructure and safe transport solutions, declined 3.5 percent despite reporting a 62 percent increase in its fiscal 2022 profit before tax.

Similarly, financial services group Legal & General was down more than 2 percent despite reporting strong growth in profit in 2022.

Restaurant Group plunged 8 percent after widening its FY22 loss.

French aerospace and defense company Thales Group tumbled 3 percent despite posting higher earnings and sales for 2022.

German sportswear firm Adidas declined 1.4 percent after posting disappointing 2022 results, reflecting geopolitical, macroeconomic and company-specific challenges.

Flavor and fragrance maker Symrise lost 3.1 percent after forecasting 2023 core profit margin slightly below market expectations.

Continental AG jumped nearly 4 percent after flagging improved earnings and margins in 2023.

In economic releases, Germany’s industrial production rebounded in January on strong growth in intermediate goods output, data from Destatis revealed.

Industrial production grew by more-than-expected 3.5 percent on a monthly basis, offsetting the revised 2.4 percent decline in December. Output was forecast to grow 1.4 percent.

Year-on-year, the decline in industrial output halved to 1.6 percent from 3.3 percent in the previous month.

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