PARIS/LONDON (dpa-AFX) – The tighter monetary policy of the US Federal Reserve (Fed) and the Russia-Ukraine conflict continued to weigh on European stock markets on Monday. The EuroStoxx 50 (EURO STOXX 50) lost 1.86 percent to 4150.94 points in the morning. In Paris, the CAC 40 fell by 1.68 percent to 6949.92 points. The FTSE 100 in London fell 1.07 percent to 7413.92 points.
Investors didn’t take any risks ahead of the Fed’s interest rate decision on Wednesday and the quarterly figures from large US technology groups due this week. Market participants assume that the Fed will raise interest rates in March in order to counteract the increase in inflation. With a view to the rest of the year, however, they fear a faster tightening than previously assumed.
The Fed’s change of course is fundamentally changing the previously very positive stock market environment, explained Eckhard Schulte, CEO of MainSky Asset Management. “Not only does the first interest rate hike in the USA seem set for March, but the Fed’s intended balance sheet reduction is likely to further worsen the opportunity/risk profile for equities over the course of the year.”
The looming military conflict between Russia and Ukraine is also becoming more and more of a burden for the markets. Amid rising tensions, the US State Department ordered families of diplomats to evacuate the US Embassy in Kyiv. A solution seems far away at the moment.
In Europe, the reluctance of investors in the travel and leisure sector was most noticeable at the start of the week, losing 3.8 percent. Airline shares lost significantly, IAG (International Consolidated Airlines), for example, fell by more than four percent. Airlines were already among the biggest losers in the corona pandemic. Geopolitical risks are now added as a further negative factor.
The technology sector, which was heavily burdened by the prospect of rising interest rates, also increased its losses considerably again. The sector slipped to a low since July 2021 and was last down 3.3 percent. Adyen (Adyen BV Parts Sociales) fell by more than six percent at the EuroStoxx end. According to detailed annual figures, Philips lost four and a half percent. Analyst David Adlington from the US bank JPMorgan sees only a few reasons for an investment in Philips. The second half of the year brings with it uncertainty, meanwhile Jefferies said.
In contrast, the telecoms sector, which is considered defensive, posted gains of 0.6 percent and thus showed its strength in weak market phases. Deutsche Telekom gained half a percent at the top of the EuroStoxx.
Unilever shares recovered sharply after a press report about a stake by activist investor Trian Partners. In London, they advanced 5.8 percent. Analyst Bruno Monteyne from Bernstein Research sees Trian’s entry as a small step towards new management. The step is therefore good news for investors who have doubts about the current management./ajx/eas