The European stocks They closed this Monday, September 25 in its lowest level in more than a monthbefore the Concern that interest rates will remain high for longer than estimated previously, after the signals from the Federal Reserve last week, to which is added the slowdown of the Chinese economy.
The pan-European STOXX 600 index fell 0.6%, its third consecutive session of losses. The travel and leisure and personal and household goods indices fell more than 2%, leading the sectoral declines.
China-exposed luxury stocks such as LVMH and Kering were down 2.6% and 4.5%respectively, amid persistent concern about the growth of the world’s second largest economy.
Miners fell 0.8%, as metal prices weaken due to rising inventories and fears of a regime of higher global interest rates for longer.
Investors weighed a series of central bank decisions, with the Federal Reserve taking a hawkish tone, the European Central Bank signaling a pause in October and Britain, Switzerland and Japan appearing surprisingly dovish.
“September’s reputation as one of the worst months for stocks will have been reinforced by the last four weeks of trading”said Chris Beauchamp, chief market analyst at online trading platform IG. “A further rise in (bond) yields only compounds the stock market’s woes, as investors realize that when (Federal Reserve Chairman Jerome) Powell says (rates) ‘more higher for longer,’ he means it.
Longer-dated euro zone bond yields rose, with Germany’s 10-year yield hitting its highest level since 2011. The ECB raised interest rates to a record high of 4% last week.
The president of the ECB, Christine Lagarde said on Monday that the central bank’s high deposit rate could help reduce inflation to 2%, repeating the bank’s guidance that neither promises nor rules out further rate hikes.
The German DAX fell 1%. Data showed German business confidence deteriorated in September, falling for the fifth consecutive month. German stocks are the worst regional performers so far this quarter, down 4.6%, compared to the STOXX 600’s 2.5% drop.
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