Tech sector pushes European stocks higher
On Thursday European stocks kept recovering from a large sell-off earlier this week, but were set for monthly declines on concerns about a slowing global economy and increasing inflation.
The pan-regional STOXX 600 index gained 0.6%, led by technology stocks, which were at the centre of the market turmoil, while miners gained from sharp declines fuelled by concerns about China’s economy. Defensive sectors such as real estate, healthcare and food & beverages also gained.
The European stocks benchmark is on track to end September with losses of 2.8% after a seven-month winning streak, as an increase in government bond yields pushed investors out of high-growth sectors such as technology towards economically sensitive banking and energy stocks.
A growing number of risks including an aggressive position from the U.S. Federal Reserve, supply-chain limitations and Chinese property developer Evergrande’s financial woes have weighed on sentiment this month, even as investors expect a steady European economy.
Defensives-heavy Swiss market is among the biggest decliners this month, while banking-heavy Spanish and British indexes remained resilient.
Asian shares managed to recover some of this week’s heavy losses but were moving towards their worst quarter since the pandemic hit, while the dollar held near a one-year high, helped by broad safe-haven demand and U.S. rate hike expectations.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.33%, but was still set for a 4.4% monthly decline and a 9.3% loss on the quarter.
That would be the benchmark’s worst quarter since the first three months of 2020, as COVID-19 stormed across Southeast Asia and investors were concerned about slowing global growth with China a particular worry.
Oil prices were lower, extending losses after official figures showed an unexpected rise in U.S inventories, reversing a run of recent gains. Brent crude lost 0.5% to $78.25 a barrel while U.S. crude fell 0.24% to $74.65. Spot gold traded at $1,731.99 per ounce, edging off its seven-week low, but still restrained by a strong dollar.