By Jack Denton
Stocks fell across Europe on Tuesday as the tech-heavy Nasdaq index and other U.S. stocks tumbled, with rising U.S. inflation concerns spooking investor sentiment.
The pan-European Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.99% slipped 2%, after closing at a fresh record high on Monday. In London, the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.47% fell 2.5%, while the CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +1.29% in Paris was 1.9% lower and Frankfurt’s DAX /zigman2/quotes/210597999/delayed DX:DAX +1.03% dropped 1.8%.
U.S. stocks fell after the open, with the Dow /zigman2/quotes/210598065/realtime DJIA +1.00% down more than 400 points after the index fell 35 points on Monday to close at 34,742. The Nasdaq /zigman2/quotes/210598365/realtime COMP +1.02% was 0.3% lower.
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 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.
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 /zigman2/quotes/208934945/delayed UK:RIO +2.85% , Glencore /zigman2/quotes/201400686/delayed UK:GLEN +3.91% , Anglo American /zigman2/quotes/201381512/delayed UK:AAL +3.56% , BHP /zigman2/quotes/203323256/delayed UK:BHP +2.15% , Fresnillo /zigman2/quotes/201300065/delayed UK:FRES +0.25% , Antofagasta /zigman2/quotes/200173667/delayed UK:ANTO +6.88% , and Polymetal International /zigman2/quotes/204469675/delayed UK:POLY +0.94% were all lower, alongside European-listed oil groups BP /zigman2/quotes/202286639/delayed UK:BP +2.57% , Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA +1.93% , Total , and Eni /zigman2/quotes/209584888/delayed IT:ENI +2.64% . Shares in the world’s largest steel producer, Luxembourgish ArcelorMittal /zigman2/quotes/209487033/delayed NL:MT +4.49% , were the biggest faller on Paris’ CAC 40.
Tech companies were also battered, including Dutch semiconductor group ASML /zigman2/quotes/206208657/delayed NL:ASML +0.96% , German software giant SAP /zigman2/quotes/202053813/delayed XE:SAP -0.10% , Finnish telecom Nokia /zigman2/quotes/203672305/delayed FI:NOKIA +3.12% , and British high-tech grocer and robotics logistics specialist Ocado /zigman2/quotes/207225647/delayed UK:OCDO +1.95% .
In travel stocks, airlines International Airlines Group /zigman2/quotes/208070069/delayed UK:IAG +1.87% — which owns British Airways — Air France-KLM /zigman2/quotes/205396176/delayed FR:AF +4.02% , Lufthansa /zigman2/quotes/201210530/delayed XE:LHA +3.70% , easyJet /zigman2/quotes/202825892/delayed UK:EZJ +0.88% , Ryanair /zigman2/quotes/202851567/delayed UK:RYA +1.02% , and Wizz Air /zigman2/quotes/210449062/delayed UK:WIZZ +1.37% took a nosedive, as did hotel giants InterContinental Hotels Group /zigman2/quotes/202865596/delayed UK:IHG +0.45% and Accor /zigman2/quotes/203800565/delayed FR:AC +1.59% .
But British e-commerce player The Hut Group /zigman2/quotes/221121045/delayed UK:THG +1.38% was a standout, with the stock up more than 13%, after a $2.3 billion deal with Japanese technology investment giant SoftBank.
Shares in battery manufacturer Invinity Energy Systems /zigman2/quotes/209592605/delayed UK:IES -0.40% also rose 27%, after striking a deal with Siemens Gamesa /zigman2/quotes/205192612/delayed UK:0H4N +0.16% Renewable Energy to develop grid-scale vanadium flow batteries.