European shares drop as inflation, slowdown fears grip markets

Posted on October 21, 2022Comments Off on European shares drop as inflation, slowdown fears grip markets

© Reuters. The German share price index DAX graph is pictured following the IPO of Porsche at the stock exchange in Frankfurt, Germany, October 20, 2022. REUTERS/Staff

(Reuters) – European shares dropped on Friday, triggered by fears that major central banks would retain their aggressive rate-hike stance to rein in prices, while investors digested mixed earnings reports that did little to ease concerns of an economic slowdown.

A slew of recent inflation reports and data indicating a strong U.S. labour market have dealt a blow to hopes of the Federal Reserve and other major central banks toning down their hawkish policy approach anytime soon.

Adding to the jitters was U.S. social media company Snap Inc (NYSE:)’s bleak fourth-quarter outlook that sounded alarm bells about a hit to advertising from rampant inflation, setting Wall Street up for early losses.

Shares of Adidas (ETR:) dropped 8% as the German sporting goods maker cut its full-year outlook, citing weaker demand.

Renault (EPA:) confirmed its full-year outlook and posted a rise in quarterly sales. Still, shares of the French carmaker were down 2.3%, with its executive flagging raw material supply concerns.

The region-wide index fell 1%, after posting gains in choppy trade on Thursday following the resignation of Liz Truss as British prime minister.

All sectoral indexes were in red, led by retail stocks, which dropped 3%.

Among individual stocks, French media company Vivendi (EPA:) reported an uptick in quarterly revenue and confirmed it was still planning to spin off its publishing business Editis. Its shares were down 2%.

Swedish telecom operator Telia fell 8% after trimming its outlook while Sika dropped 3.7% after the Swiss chemicals maker missed its third-quarter profit expectations.

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