Technology, travel and retail shares fuelled declines in European stocks on Wednesday as soaring oil and gas prices intensified concerns about higher inflation denting economic growth.
After a late-session rally on Tuesday, the pan-European STOXX 600 index fell 1.7 percent, with travel & leisure and tech stocks tumbling more than 2 percent.
Banks slipped 0.6 percent, but were the smallest decliners on prospects of higher interest rates as U.S. and European government bond yields climbed and oil prices hit multi-year highs.
Dutch and British wholesale gas prices surged to record highs on Tuesday amid wider energy market price hikes.
“It’s (gas prices) really soaring at the moment and the question is whether central banks are going to act on this from an inflation perspective, which is set to go higher, or from a growth perspective, which is set to go lower,” said Bert Colijn, senior economist at ING.
“We’re not expecting any longer term stagflation, but the impact of this could be somewhat stagflationary.”
A global energy crunch, labour shortage and other supply chain constraints have weighed on a global economy recovery when major central banks are considering easing the massive pandemic-era stimulus. The STOXX 600 is down about 5.5 percent since hitting a record high in August.
Data earlier showed German industrial orders fell more than expected in August on weaker demand from abroad following two months of unusually strong gains.
With third-quarter earnings season around the corner, analysts are anticipating a near 46 percent rise in profit for companies on STOXX 600, boosted by energy and industrial companies, as per Refinitiv IBES data. That follows a 152.6 percent jump in the second quarter and a 25 percent decline in the year-ago quarter.
Tesco jumped 4.1 percent as Britain’s biggest retailer raised its full-year outlook and launched a 500-million-pound share buyback programme.
UK’s HSBC rose 2.7 percent after UBS upgraded the stock to “buy”, while Germany’s Commerzbank gained 0.6 percent after the wider sector rallied 3.5 percent in the previous session.
Laggards included Danish medical device maker Ambu, which slumped 8.1 percent after it warned earnings and revenue growth for 2021 would fall below its previous forecast.
Deutsche Telekom fell 4.6 percent after Goldman Sachs sold shares worth 1.58 billion euros ($1.83 billion) in a SoftBank structured finance deal.
