Home Finance European shares tumble in global selloff

European shares tumble in global selloff

European stocks slumped to mark a third week of losses. This is as jitters over monetary policy tightening by central banks this year. Weak economic data sparked steep declines across global equities. The pan-European STOXX 600 dropped 1.8%, and was down 1.4% over the week. Mining stocks were the day’s worst performers, losing 3.3%. Anglo-Australian miner Rio Tinto tumbled 2.2%, which is the biggest drag on the sector.

This is after Serbia revoked its lithium exploration licences over environmental concerns. Investors are now waiting for the U.S. Federal Reserve’s meeting for details on how it intends to tackle high inflation. Craig Erlam, a senior market analyst at OANDA said that there is a lot of speculation, U.S. rate hikes this year, a 50-basis point hike in March, that has fed markets’ underlying anxiety. He stated that they can never underestimate the knock-on effects of the U.S. on global markets. Also, Europe is facing challenges of its own with the Omicron and energy crisis. He also added that markets were even starting to price in potential tightening by the European Central Bank (ECB).

ECB accounts showed policymakers argued at a meeting recently that inflation could easily get stuck above target. Also, the central bank should keep the door open to tightening policy. Then the euro zone consumer prices jumped at a record pace in December. This is boosted by a surge in energy prices and supply chain bottlenecks. The Bank of England will press ahead with its tightening cycle next month as red-hot inflation runs well ahead of target. Erlam said that at some point, the investors will start to be drawn back in towards European markets. This is once the peak inflationary period of late first-quarter, early second-quarter passes, and economic data starts to improve.

Airbus lost 2.0%, and that too after saying it had cancelled a contract with Qatar Airways for 50 A321neo jets. This is broadening a $600 million-plus dispute with the Gulf carrier over the larger A350. Siemens Energy plunged 16.6%. This is after cutting its forecast as wind unit Siemens Gamesa warned of prolonged supply chain issues. Siemens Gamesa dropped 14.0%. This is by joining Siemens Energy as the two worst performers on the STOXX 600. Concerns over supply chain disruptions also saw European automobile stocks lag their peers this week, down 4.2%.

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