EURO SHARES AT 2-MONTH LOW

EUROPEAN shares hit two-month lows yesterday, led by sectors including travel and leisure and technology as a mix of worries over prolonged Covid19 curbs in China and surging bond yields fuelled selling pressure.

The pan-European Stoxx 600 index shed 2.9 percent to touch its lowest since March 8, with travel and leisure stocks falling 6 percent.

Tech stocks dropped 5 percent to November 2020 lows as US and European government bond yields surged to multi-year highs on bets for faster interest rate hikes aimed at taming a surge in inflation.

Hawkish policymaker Robert Holzmann said over the weekend the European Central Bank should hike interest rates as many as three times this year to combat inflation.

Miners were also afflicted, falling 4.4 percent as Chinese iron ore futures plunged as much as 7 percent on concerns about demand in the world’s second-largest economy after data showed April export growth slowed to single digits.

The benchmark Stoxx 600 has shed over 5 percent so far in May, as China’s Covid curbs, aggressive monetary policy tightening and the Ukraine war stoke concerns of a global economic slowdown. The Stoxx 600 index is down 15.6 percent since hitting an all-time high in January.

Investors also awaited inflation readings from the US in the week, with Wall Street’s S&P 500 index and Dow Jones hitting fresh 2022 lows yesterday.

“With a fresh set of tasty inflation numbers due out from a whole host of countries this week, including the US, investors are still very much in the sell camp,” said Danni Hewson, financial analyst at AJ Bell.

Adding to the gloom, investor morale in the euro zone fell in May to its lowest level since June 2020, as the impact of the war in Ukraine on Europe’s largest economy becomes increasingly clear.