Europe midday: Shares reverse ahead of US, ECB rate decisions as investors wobble
European shares slumped back into the red at midday on Tuesday as inflationary fears once again gripped investors ahead of key European and US central bank rate decisions.
The pan-regional Stoxx 600 index was down by almost 1% at midday, having giving up gains in the morning. Stocks slumped more than 2.4% on Monday.
Investors were also digesting the latest figures from the UK's Office for National Statistics, which showed the unemployment rate unexpectedly rose in the three months to April for the first time in a year, while vacancies remained at record levels and wages fell at the fastest rate in a decade.
The unemployment rate ticked up to 3.8% from 3.7% in the three months to March and versus expectations for a decline to 3.6%. Still, it remained close to 50-year lows.
In Germany, investor sentiment improved in June but remained in negative territory, according to a survey released by the ZEW Center for European Economic Research in Mannheim.
The headline ZEW investor expectations index rose to -28.0 from -34.4 in May, coming in just a touch below consensus expectations for a reading of -27.5.
Meanwhile, the current situation index rose to -27.6 in June from -36.5 the month before.
“Investors have endured a bruising start to the week as fears of recession begin to mount,” said Interactive Investor head of markets Richard Hunter.
“In an escalation of estimates of the Federal Reserve’s hawkish monetary stance, expectations for the interest rate rise due tomorrow have now been amended to a hike of 0.75% from the previous level of 0.5% which had been widely expected.”
“At the same time, there was an inversion of the yield curve between the benchmark two and 10-year Treasury bonds in the US which is seen as a harbinger of forthcoming economic contraction. The measure has tended to be a reliable warning in the past and, in the absence of any immediate positive catalysts, there is little to present an opposing view.”
Inn equity news, shares French IT company in Atos slumped more than 22% after it said chief executive Rodolphe Belmer was quitting after six months in the job following weeks of reports of deep divisions with the board over strategy.