European shares sank to their lowest in over a month on Friday, on track to post weekly losses, as concerns around interest rates across the world remaining higher for longer and dwindling growth prospects in China hammered risk sentiment.
The pan-European STOXX 600 eased 0.9%, poised for its fourth consecutive day of losses.
Surging bond yields have pressured equities this week, with the STOXX 600 headed for a weekly fall of over 2%, touching its lowest weekly level in a month.
“Longer end bond yields have started to rise again because … hopes of rate cuts from next year onward – they’re basically starting to get priced out,” said Matthias Scheiber, head of multi-asset at Systematic Edge, Allspring Global Investments.
“It looks like growth is more robust and inflation is more sticky.”
China’s economy was the other topic on investors’ minds as a series of economic data and ructions in the property sector have laid bare the stumbling post-pandemic recovery.
China-exposed luxury heavyweights LVMH, Kering (EPA:PRTP) and Hermes fell between 1.5% and 1.7% on heightened concerns of weak economic growth in the world’s second-largest economy.
Europe’ largest bank HSBC, which also does business in China, weighed on the STOXX 600, falling 1.2%.
Embattled developer China Evergrande Group filed for bankruptcy protection in a U.S. court as part of one of the world’s biggest debt restructuring exercises.
European miners, who also face an exposure to China, lost 1.8%
UK’s blue-chip FTSE 100 fell 0.8% after data showed British retail sales slumped more sharply than expected in July.
Novo Nordisk (NYSE:NVO), Europe’s second biggest listed firm, eased 1.8% after three sessions of gains.
The construction and materials sector fell 1.5% as Swedish heat pump maker Nibe fell 1.7%, its sixth straight daily fall.
Retailers fell 1.7% as H&M lost 2.2% a day after a Reuters report showed the world’s second-biggest fashion retailer has decided to gradually stop sourcing from Myanmar.
The industrial goods and services sector, down 1% for the day, is set to be the worst performing this week.
Bond yields eased across Europe, with German bonds, traditionally considered as Europe’s benchmark, easing to 2.6%. [GVD/EUR]
SUSE surged 59.7% after the software solutions provider said it would be taken private by its majority shareholder EQT (NYSE:EQT) AB for an offer price of 16 euros per share.