👀 Ones to watch: The MOST undervalued shares to buy right nowSee Undervalued Shares

European shares slide more than 1% on hawkish ECB remarks, disappointing China data

Published 17/01/2024, 08:41 pm
© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, January 15, 2024.     REUTERS/Staff/File Photo
UK100
-
STOXX
-

By Shristi Achar A and Shashwat Chauhan

(Reuters) -European shares declined on Wednesday as more hawkish remarks from European Central Bank (ECB) officials tempered interest rate cut expectations, while glum economic data from China further soured investor sentiment.

The pan-European STOXX 600 index ended 1.2% lower, touching a more than six-week low during the day and logging its biggest single-day percentage fall since October.

ECB President Christine Lagarde said the central bank was on track to get inflation back to its 2% target but victory had not yet been won, while Dutch central bank chief Klass Knot said market players were getting ahead of themselves in pricing monetary easing.

While a pause in rate hikes is nearly priced in for the upcoming meeting in January, money markets still estimate a total of 150-basis point cuts in interest rates this year. [0#ECBWATCH]

All major sectoral indexes logged declines, with rate-sensitive real estate the top sector laggard, down 2.8%, clocking its worst single-day percentage drop in over two months.

Meanwhile, data showed China's economic growth rate for the fourth quarter missed market expectations, adding to the risk-off appetite for equities.

China-exposed luxury stocks, including LVMH, Kering (EPA:PRTP) and Richemont dropped between 2.4% and 3.5%, respectively, while automobiles declined 2.0%.

"The longer term outlook for some of those (China-exposed) sectors could be good in terms of broad valuations, but you still can see a ton of volatility and downside potential as weakness in China continues," said Josh Chastant, senior investment analyst at GuideStone Funds.

Asia-focussed lender HSBC lost 1.0%, while insurer Prudential (LON:PRU) dipped 3.9%.

Base and precious metal miners also shed 2.0%, bogged down by weak copper and gold prices. [MET/L] [GOL/]

Britain's blue-chip FTSE 100 index was the worst hit across European bourses, down 1.5% after data showed the country's annual rate of inflation sped up for the first time in 10 months in December, denting rate cut bets. (L)

A separate reading showed euro zone inflation running at 2.9% in December on a yearly basis.

In the United States, December retail sales increased more than expected, which pushed the yield on the German two-year government bond to a one-month high.

© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, January 15, 2024.     REUTERS/Staff/File Photo

Among headlining stocks, energy heavyweight Shell (LON:RDSa) lost 2.3% amid slipping oil prices. Separately, UBS downgraded its rating to "neutral" from "buy".

Zurich Insurance Group fell 1.8% after UBS cut its rating to "neutral" from "buy".

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.