European stock markets head lower amid weak global sentiment

·3 min read
LONDON, UNITED KINGDOM - 2021/10/08: London Stock Exchange headquarters is pictured from Paternoster Square.
Bank of England has warned that markets could face sharp correction. (Photo by Thomas Krych/SOPA Images/LightRocket via Getty Images)
London Stock Exchange headquarters is pictured from Paternoster Square. The FTSE 100 fell 0.8% after opening. Photo: Thomas Krych/SOPA Images/LightRocket via Getty Images

European stock markets slumped into the red on Tuesday as investors continued to fret about the global energy crunch, a surge in prices, and the possibility of interest rate hikes from the Bank of England.

In London, the FTSE 100 (^FTSE) ended 0.2% down, while the CAC (^FCHI) tumbled 0.4% in Paris, and the German DAX (^GDAXI) was also almost 0.4% lower.

It came as unemployment across the UK dipped as payrolls and vacancies surged.

According to the latest figures from the Office for National Statistics (ONS), the jobless rate fell to 4.5% in the three months to August. This was down from 4.6% in the three months to July, and 0.4 percentage points lower than the previous quarter.

Vacancies rose to 1.1 million in the three months to September, while employers added 207,000 workers to their payrolls.

Mims Davies, the UK’s minister for employment, said: “With unemployment falling once again, and another record rise in the number of workers on employer payrolls, it’s clear our plan to create, support and protect jobs is working.

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“As we enter the next phase of recovery, the £500m ($679.9m) boost to our Plan for Jobs will continue to deliver more skills and opportunities for people up and down the country whilst crucially helping to fill vacancies across growing sectors as we push to build back better.”

Across the pond, the S&P 500 (^GSPC) and the tech-heavy Nasdaq (^IXIC) were both flat at the time of the European close, while the Dow Jones (^DJI) also was treading water as traders geared up for some major corporate results.

On Monday, Wall Street ended the day lower despite a positive trend upwards earlier in the session, while the safe-haven dollar held firm.

“While investors want to believe the narrative that stock markets can continue to move higher, this belief is bumping up against the reality of how the continued rise in energy prices, as well as supply chain pressures are likely to impact company profit margins, at a time when consumer incomes are likely to face increasing pressure as we head into the winter months,” Michael Hewson, from CMC Markets, said.

“The reality is that over the last few months stock markets haven’t gone anywhere, chopping in a broad range since early July.”

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The International Monetary Fund (IMF) is holding its annual meetings in Washington, DC, where it is expected to issue a downbeat economic outlook, as supply-chain bottlenecks and rising inflationary pressures threaten the recovery.

Asian shares dropped overnight as a global energy crunch continued to fuel inflation fears.

In Tokyo, the Nikkei (^N225) dropped 0.9% and the Hang Seng (^HSI) fell 1.7% and the Shanghai Composite (000001.SS) dipped almost 1.3%

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