Europe open: Shares lower on Covid, inflation worries
European stocks opened lower on Wednesday as travel shares fell on worries about increasing cases of the Covid-19 Delta variant while a rise in UK inflation also dampened sentiment.
The pan-European Stoxx 600 index fell 0.38% in early deals. The UK’s export-heavy FTSE 100 was 0.63% lower as the pound gained after June inflation jumped further above the Bank of England’s 2% target.
US and Asia markets fell after data on Tuesday showed US inflation in June was higher than expected, stoking fears of an increase in interest rates.
“Inflation is getting hotter and hotter. UK inflation rose to 2.5% in June from 2.1% the previous month, smashing expectations and in the process likely to increase the pressure on the Bank of England to tighten monetary policy. It’s even hotter in the US, with headline CPI print hitting 5.4%, whilst the month-on-month registered its highest jump since June 2008,” said Markets.com analyst Neil Wilson.
In equity news, travel stocks all suffered as investors fretted about the rising Delta variant cases, threatening the economic recovery. TUI, easyJet and British Airways owner IAG were all lower.
EasyJet was also knocked lower by a downgrade to ‘neutral’ at Davy, while IAG was downgraded to ‘market perform’ at Raymond James.
Shares in travel food outlet operator SSP Group fell almost 3% as chief executive Simon Smith said he was leaving.
Avanza Bank slumped to the bottom of the Stoxx, down 8.59% as the Swedish bank reported a fall in second quarter profits.
Swedish telecoms operator Tele2 gained 5.5% after it reported a rise of 8% in quarterly core earnings, helped by cost savings and less headwinds related to the pandemic.
German fashion house Hugo Boss rose after it forecast its revenue to grow by 30% to 35% this year.