European stocks fall interest rates, earnings jitter

European equities began on Monday in a week of a slight decline as inflation and nerves over the upcoming earnings season offset rising commodity prices that underpin oil and mining equities.

The Pan-Europe STOXX 600 index fell 0.4% in the morning trading, with travel & leisure and real estate stocks falling the most.

Susannah Streeter, Senior Investment and Market Analyst at Hargreaves Landsdown, said:

“It acts as a hindrance to economic recovery.”

Brent crude surged almost 2% as the energy crisis surrounding major economies showed no signs of easing. Meanwhile, contracts for coking coal in Dalian have expanded significantly as supply instability has increased due to the recent floods in Shanxi Province, which has the highest coal production in China.

Miners surged 2.2%, leading inter-sectoral profits, while oil and gas inventories increased 0.8%.

The large number of commodity companies on the European stock exchange helped keep losses down, but investors are generally concerned that rising raw material prices will hurt their profits for the profit season. I did.

US banks will start their reporting season on Wednesday, and investors expect third-quarter profit growth to slow compared to the surge in the previous quarter. Earnings growth in the third quarter is estimated to increase by 29.6% for US companies and 45.6% for European companies, according to Refinitiv IBES data.

The bank index reached its highest level since February 2020, and investors raised interest rate expectations, recovering almost all of the pandemic losses. Money markets are fully priced by the end of next year with a 10 basis point rate hike from the European Central Bank.

British banks HSBC, Lloyds Banking Group, Barclays and NatWest Group all rose about 1 percent after hawkish comments from Bank of England officials stepped up traders’ bets on rate hikes in November. ..

UK online fashion retailer ASOS has announced that CEO Nick Beighton will step down, warning that rising logistics costs and supply chain disruptions could reduce profits in 2022 by more than 40%. Later, it fell 9.8% in stocks.

German real estate investor Adler Group fell 0.6% after agreeing to sell € 1.49 billion ($ 1.73 billion) worth of residential and commercial real estate to rival LEG Immobilien.

By Sruthi Shankar