European stocks extended declines after minutes from the Federal Reserve’s policy meeting in July suggested further interest-rate increases could be needed to contain inflation.
The Stoxx Europe 600 fell 0.7% by 3:08 p.m. in London, declining for a third session. Industrial goods and services stocks led the retreat, while the basic resources and energy sectors were the biggest gainers.
Among individual stocks, Adyen NV slumped by the most on record after reporting first-half earnings that missed estimates as increased competition in North America contributed to the Dutch payment company’s slowest revenue growth since its IPO. Swiss building materials firm Geberit AG fell after reporting second-quarter results that analysts said represented a “sizeable” miss.
Minutes from the Fed’s July policy meeting showed that most participants continued to see “significant upside risks to inflation, which could require further tightening of monetary policy.” However, two officials favored leaving rates unchanged or “could have supported such a proposal” instead of the rate hike authorized by the Federal Open Market Committee.
“The minutes came across as reasonably hawkish, not altogether surprising given recent commentary from various Fed officials,” said Michael Hewson, chief market analyst at CMC Markets. “However, there was some surprise that only two members appeared to support keeping rates unchanged.”
Investors remained concerned about signs of weakness in Chinese markets. Zhongzhi Enterprise Group Co., the Chinese shadow banking giant whose liquidity crisis has fanned fears about financial contagion, is planning to restructure its debt and hired KPMG LLP to conduct an audit of its balance sheet, according to people familiar with the matter.
“In driving Asian indices to nine-month lows, the current Chinese property woes may prompt an uneasy feeling of déjà vu for investors who remember previous episodes of turbulence in the country’s real estate sector and the knock-on effect they had on wider markets,” said Russ Mould, investment director at AJ Bell.
“Officials in Beijing are doing their best to allay fears, but their efforts at reassurance may fall on deaf ears for now as the crisis plays out.”
For more on equity markets:
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- M&A Watch Europe: BAE Systems, GAM, ArcelorMittal, FLSmidth, SBB
- Amsterdam’s Sleepy IPO Scene Gets Some Good News: ECM Watch
- Aviva Crosses Inflationary Headwinds to Growth: The London Rush
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--With assistance from Farah Elbahrawy.
