Europe close: Geopolitics dampen investor sentiment
By Alexander Bueso
Date: Monday 10 Oct 2022
(Sharecast News) - European stocks finished on a mixed note on Monday following Russian attacks on the Ukrainian capital of Kyiv and other cities in response to a crippling strike against the strategic bridge over the Kerch Strait.
That sparked worries that the war there might now escalate as Moscow's campaign continued to falter.
"European stocks did better this morning, thanks perhaps in large part to the weaker pound and euro. But the fresh outrages in Kyiv are another reminder that European markets face an even tougher winter than those in the US, despite the massive support being provided by governments," said IG chief market analyst Chris Beauchamp.
"The bounce is already fizzling out, with more pain for European stocks ahead this quarter."
The pan-regional Stoxx 600 was down 0.25% to 390.68, while the German Dax ended the day roughly flat at 12,272.94 and the FTSE edged up 0.05% to 20,912.96.
France's Cac-40 and Spain's Ibex 35 on the other hand both drifted lower.
The yield on the benchmark 10-year Italian government bond was lower, together with Brent crude oil futures and the euro.
Asian stock markets all registered sharp drops overnight, although holidays in Japan and South Korea meant volumes were thin.
Chinese tech stocks were hit by US export control measures aimed at slowing Beijing's technological advances. Markets were also hit by weak data from China, where services activity contracted for the first time in four months.
"Trade wars are back: Chinese tech stocks led the declines in Asian trade after the Biden administration imposed a set of sweeping export controls on Friday," said Markets.com analyst Neil Wilson.
"Stocks plunged at the end of the week following the US nonfarm payrolls report, which was strong enough to give the Federal Reserve plenty more cover to keep on raising rates. The Dow Jones rose 2% last week and the S&P 500 added 1.5%, but the jobs report erased much bigger gains."
In the UK, the Bank of England said it was on standby to double its daily government bonds purchases ahead of the final day of its emergency intervention programme on Friday.
Longer-dated Gilts were under selling pressure again with the yield on the benchmark 10-year Gilt jumping by 23 basis points to 4.468%.
Investor sentiment was also hit when a survey revealed that Eurozone investor morale fell for the third month in a row to its lowest level since May 2020.
The Sentix index for the eurozone slumped to -38.3 points in October from -31.8 in September.
In equity news, DS Smith shares surged as the packaging maker released an upbeat earnings update. The news also boosted sector rivals Smurfit Kappa and Mondi.
Student accommodation provider Unite was also up after saying earnings would be at the top end of expectations.
Shares in low-cost East-Europe focused airline Wizz Air fell on news of the attacks on Kyiv as did those of its German rival Lufthansa.
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