Stocks fell across Europe on Tuesday as Nasdaq futures tumbled more than 1%, with rising U.S. inflation concerns spooking investor sentiment.
The pan-European Stoxx 600 XX:SXXP slipped 2%, after closing at a fresh record high on Monday. In London, the FTSE 100 UK:UKX fell 2.3%, while the CAC 40 FR:PX1 in Paris was 1.9% lower and Frankfurt’s DAX DX:DAX dropped 2.1%.
Dow industrials futures DJIA FUTURES were pointing down around 170 points, set for a weak open after the index fell 35 points on Monday to close at 34,742.
Every constituent of the three major stock market indexes in London, Paris, and Frankfurt was in the red in early trading. Stocks in Europe, as well as Asia, followed Wall Street’s move lower on Monday, led down by the tech-heavy Nasdaq COMP which tumbled 2.55%.
“Once again it has been concern about inflation that appears to be weighing on broader market sentiment, with commodity prices once again the major culprit, ahead of U.S. CPI numbers that are due out later this week,” said Michael Hewson, an analyst at CMC Markets.
Also read: The biggest ‘inflation scare’ in 40 years is coming — what stock-market investors need to know
Investors will be closely watching the headline U.S. inflation figure — the Consumer Price Index, or CPI — when it is released on Wednesday. Hewson expects to see “a big rise” in this key measure.
“It seems that investors are now fretting about rising prices and sharply higher inflation again,” Hewson said. “The big question is whether they are right to be, and while we’ve seen sharply higher prices in the latest ISM [Institute for Supply Management] surveys and commodity prices are also on a tear, the bigger concern is whether they are likely to be temporary, or much more persistent. In the short term, it is probably too early to know.”
There was a particular weakness in companies exposed to commodity prices — especially miners and major oil companies — as well as tech groups and travel stocks in Europe.
The London-listed miners Rio Tinto UK:RIO, Glencore UK:GLEN, Anglo American UK:AAL, BHP UK:BHP, Fresnillo UK:FRES, Antofagasta UK:ANTO, and Polymetal International UK:POLY were all lower, alongside European-listed oil groups BP UK:BP, Royal Dutch Shell UK:RDSA, Total TOT, and Eni IT:ENI. Shares in the world’s largest steel producer, Luxembourgish ArcelorMittal NL:MT, were the biggest faller on Paris’ CAC 40.
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Tech companies were also battered, including Dutch semiconductor group ASML NL:ASML, German software giant SAP XE:SAP, Finnish telecom Nokia FI:NOKIA, and British high-tech grocer and robotics logistics specialist Ocado UK:OCDO.
In travel stocks, airlines International Airlines Group UK:IAG — which owns British Airways — Air France-KLM FR:AF, Lufthansa XE:LHA, easyJet UK:EZJ, Ryanair UK:RYA, and Wizz Air UK:WIZZ took a nosedive, as did hotel giants InterContinental Hotels Group UK:IHG and Accor FR:AC.
But British e-commerce player The Hut Group UK:THG was a standout, with the stock up more than 11%, after a $1.6 billion deal with Japanese technology investment giant SoftBank.
Shares in battery manufacturer Invinity Energy Systems UK:IES also rose 30%, after striking a deal with Siemens Gamesa UK:0H4N Renewable Energy to develop grid-scale vanadium flow batteries.
