European stocks fall as Bank of England boost fades; Stoxx 600 down 1.6%

Elliot Smith and Holly Ellyatt

European stocks fell on Thursday as the initial reprieve after the Bank of England stepped in to calm the markets seemingly faded.

TICKER	COMPANY	NAME	PRICE	CHANGE	%CHANGE	VOLUME
.FTSE	FTSE 100	*FTSE	6932.23	-73.16	-1.04	238909229
.GDAXI	DAX	*DAX	12061.59	-121.69	-1	22103127
.FCHI	CAC 40 Index	CAC	5696.46	-68.55	-1.19	22129845
.FTMIB	FTSE MIB	*FTSE MIB	20624.34	-228.33	-1.09	136393989
.AEX	AEX Amsterdam Index	AEX	637.27	-3.82	-0.6	22056444
.IBEX	IBEX 35 Idx	*IBEX 35	7350.6	-91.6	-1.23	53201216

The pan-European Stoxx 600 fell 1.6% by mid-morning, with autos dropping 3.4% to lead losses as all sectors and major bourses slid into negative territory.

Sterling has stooped to record lows against the U.S. dollar in recent days, and slid once again on Thursday morning to trade just below $1.08.

Global markets saw another volatile trading day on Wednesday, with stocks trading sharply lower as global markets sold off on economic concerns surrounding inflation and the growth outlook.

Market turmoil continued to hit the U.K., prompting the Bank of England to suspend the planned start of its gilt selling next week and begin temporarily buying long-dated bonds in order to calm the market chaos unleashed by the new government’s so-called “mini-budget.”

That move calmed markets in the U.S. yesterday, and that, in turn, pacified indices in Asia-Pacific overnight. U.S. stock futures inched lower in early premarket trading on Thursday, however.

Euro zone economic sentiment continues to deteriorate

The European Commission’s economic sentiment indicator, which aggregates business and consumer confidence surveys, fell to 93.7 in September from 97.3 in August, its lowest point since November 2020.

Confidence plummeted across economic sectors amid a broad increase in inflation expectations, despite the European Central Bank’s commitment to interest rate hikes in order to rein in soaring prices.

– Elliot Smith

Porsche shares rise in Frankfurt market debut

Porsche shares increased almost 2% above its IPO price in its stock market debut on Thursday, in what’s being billed as one of Europe’s biggest ever public offerings.

Shares in the luxury carmaker initially traded at 84 euros ($81) at the start of the day.

Shares had been priced at the top end of their range late Wednesday, putting the company value up to 75 billion euros.

— Hannah Ward-Glenton

Stocks on the move: Rational up 12%, Barratt Developments down 9%

Rational shares jumped more than 12% in early trade to lead the Stoxx 600 after the German combi steamer and oven manufacturer raised its sales revenue and profit forecast for 2022.

At the bottom of the European blue chip index, British property developer Barratt Developments fell more than 9%.

– Elliot Smith

CNBC Pro: Analyst says this FAANG stock is an evergreen winner — and investors should buy the dip

Tech stocks have had a difficult year so far but a Rosenblatt Securities analyst thinks the sell-off is an opportunity for long-term investors to buy the dip.  

“Stay away from the losers,” he said, recommending “winners in the various secular battles and evolutionary battles” in tech.

— Zavier Ong

Stocks may continue this ‘oversold bounce’ over the next few days, Wells Fargo’s Harvey says

Wells Fargo’s Chris Harvey expects stocks to continue their upward move.

“The spike in short interest, retail selling skew, and BOE’s action all suggest stocks will continue their oversold bounce for the next few days,” he said in a note to clients Wednesday.

Stocks hit fresh lows earlier in the week, with the S&P 500 notching a new bear market. The sell-off was triggered by the Fed’s latest rate decision last week, which some investors believe steered the market into oversold conditions.

As the cost of capital rises and prices hover near record highs, the consensus is increasingly coming to believe that a Fed-induced recession is unavoidable, Harvey said.

“We look at a recession like a car crash,” he wrote. “You never know how bad it will be, but there is almost no ‘better-than-expected’ outcome — so policymakers need to be careful what they wish for.”

— Samantha Subin

10-year Treasury yield drops the most since 2020

The yield on the benchmark 10-year Treasury note dropped the most since 2020 on Wednesday, despite briefly topping 4% earlier in the session, after the Bank of England announced a bond-buying plan to stabilize the British pound.

The 10-year Treasury yield last dropped 23 basis points to 3.733%, or the most it’s dropped since 2020.

It hit a high of about 4.019%, a key level that was the highest since October 2008, earlier in the day before erasing those gains.

Yields and prices move in opposite directions. One basis point is equal to 0.01%.

10-year Treasury yield drops Chart

— Sarah Min

European markets: Here are the opening calls

European stocks are expected to open in negative territory on Wednesday as investors react to the latest U.S. inflation data.

The U.K.’s FTSE index is expected to open 47 points lower at 7,341, Germany’s DAX 86 points lower at 13,106, France’s CAC 40 down 28 points and Italy’s FTSE MIB 132 points lower at 22,010, according to data from IG.

Global markets have pulled back following a higher-than-expected U.S. consumer price index report for August which showed prices rose by 0.1% for the month and 8.3% annually in August, the Bureau of Labor Statistics reported Tuesday, defying economist expectations that headline inflation would fall 0.1% month-on-month.

Core CPI, which excludes volatile food and energy costs, climbed 0.6% from July and 6.3% from August 2021.

U.K. inflation figures for August are due and euro zone industrial production for July will be published.

— Holly Ellyatt

Source : CNBC