European shares skid to 3-week lows on COVID surge, rate hike fears (updated)

Aareal Bank AG

23/11/2021 10:01

(For a Reuters live blog on U.S., UK and European stock
markets, click LIVE/ or type LIVE/ in a news window)
    * STOXX 600 set for worst day in nearly two months
    * Tech stocks lead losses, volatility picks up 
    * Euro zone Nov growth surprisingly strong

 (Adds analyst's comment, updates prices)
    By Anisha Sircar
    Nov 23 (Reuters) - European stocks slumped to a three-week
low on Tuesday and were set for their worst session in nearly
two months as a risk-off mood deepened amid a resurgence in
COVID-19 cases and rate hike concerns.
    The pan-European STOXX 600  .STOXX  shed 1.3%, led by a 2.7%
drop in tech stocks  .SX8P  as prospects of a high-rate
environment dented appeal of the high-growth sector.
    U.S. President Joe Biden on Monday tapped Jerome Powell to
continue as Fed chair, lifting bets of U.S. rate hikes in 2022.
Money market traders have now fully priced in a 10-basis-point
rate hike by the European Central Bank in December 2022, up from
50% odds on Monday.
    "What happens in the U.S. affects the world, and especially
European firms importing from the United States," said
Charalambos Pissouros, head of research at JFD Group.
    "The reason tech stocks are affected the most is because
high-growth firms tend to be valued based on discounted future
cash flows, and thus, higher rates faster mean lower present
values," Pissouros said.
    Growing nerves around a fourth wave of COVID-19 infections
stalling European recovery at a time when central banks are
planning the withdrawal of monetary support has also pulled
investors out of equities.
    The Euro STOXX 50 volatility index  .V2TX , Europe's main
gauge of stock market anxiety, touched its highest level in
almost seven weeks.
    "One-off events or company-related headline news, such as
with Telecom Italia yesterday, cannot last for too long, or
overshadow concern around increasing COVID cases, new lockdown
measures, and growth in European economies," Pissouros said.
    IHS Markit's survey showed euro zone business growth
unexpectedly accelerated this month, while price pressures
soared again.  urn:newsml:reuters.com:*:nZRN003EPM
    Meanwhile, travel stocks  .SXTP  slipped 1.4% after the
United States issued an advisory against movement to Germany and
Denmark due to rising COVID-19 cases, while oil stocks  .SXEP 
slid 0.9% tracking a dip in crude prices on growing expectations
that the United States, Japan and India will release crude
reserves to tame prices.  urn:newsml:reuters.com:*:nL1N2SD2L2 O/R 
    Thyssenkrupp  TKAG.DE  fell 6.2% after Swedish activist fund
Cevian nearly halved its stake in the German conglomerate.
 urn:newsml:reuters.com:*:nL1N2SD2HQ
    British online electricals retailer AO World  AO.L  slipped
24.6% after trimming its fiscal 2022 profit outlook citing
supply chain issues.  urn:newsml:reuters.com:*:nL4N2SE1PH
    Dutch financial services company Intertrust  INTER.AS 
surged 14.6% to its highest in over five years after saying it
had received multiple takeover offers.  urn:newsml:reuters.com:*:nL8N2SE1BO

 (Reporting by Anisha Sircar in Bengaluru; Editing by Shailesh
Kuber and Saumyadeb Chakrabarty)
 ((Anisha.Sircar@thomsonreuters.com;))