Europe open: Stocks slump as H&M, Next disappoint
European stocks were firmly in the red in early trade on Thursday as relief sparked by the Bank of England’s intervention in bond markets proved short-lived.
At 0845 BST, the benchmark Stoxx 600 index was down 1.5%, while Germany’s DAX and France’s CAC 40 were 1.4% and 1.3% lower, respectively.
Stocks ended up on Wednesday after the BoE stepped into bond markets following the recent selloff. But the reprieve was only temporary, with investors now mulling the scale of the intervention, which will see the Bank spend as much as £65bn on bond-buying overall, with £5bn of buying a day until 14 October.
Neil Wilson, chief market analyst at Markets.com, said: "I have rarely seen sentiment so bad: ‘we’re doomed, doomed!’ seems to be the prevailing mood across the markets.
"The good news is that this is the kind of thing we need to get to the moment of capitulation when everyone throws in the towel and the market bottoms. The bad news is what happens until then and what damage is done to markets and people’s finances in the process.
"UK bond markets are a case in point - and no one is terribly sure what happens next; fiscal policy and monetary policy are both incredibly uncertain. The salve administered by the Bank of England yesterday is already wearing off - 30yr gilt yields jumped this morning. Markets like to test the limits. You can’t fight the Fed and you can’t fight the tape: the BoE and HMT are no different to anyone else."
In corporate news, Swedish retailer H&M dropped after it launched a 2bn Swedish crown cost-saving programme and posted a decline in third-quarter sales.
London-listed Next slid after the clothing and homeware retailer cut its sales and profits forecast on the back of the weakening economic outlook, including the recent turmoil in currency markets.
Next now expects full-price second-half sales to be down 1.5% on the previous year, compared to earlier guidance for growth of 1%, while full-year profits forecasts have been trimmed to £840m from £860m.