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STOXX 600 remains near two-month lows
Swiss stocks fall as c.bank rises 75 basis points
FTSE 100 down ahead of likely sharp BOE hike
(Adds comments and details; updates prices throughout)
By Shreyashi Sanyal and Johann M Cherian
September 22 (Reuters) – European stocks fell on Thursday, with tech stocks falling after the US Federal Reserve delivered another gargantuan rate hike and signaled further hikes in its fight against stubbornly high inflation.
The pan-European STOXX 600 index was down 0.8% by 0817 GMT, while rate-sensitive European tech stocks fell 1.6% and banks gained 0.4%.
The Fed hiked interest rates by 75 basis points for the third straight session on Wednesday and sees its target interest rate at the highest level since 2008 and rising to the 4.25% to 4.50% range by the end of this year.
“The FOMC (Federal Open Market Committee) may not yet fully recognize this, but they have made it very clear that they will prioritize inflation and Powell is increasingly preparing the market for a not-so-soft economic landing,” Elwin de Groot said , Head of Macro Strategy at Rabobank.
Meanwhile, European Central Bank executive board member Isabel Schnabel said interest rates must keep rising as inflation is still far too high even as the euro zone faces an economic downturn.
The Swiss National Bank joined other central banks in tightening monetary policy with a 75 basis point hike to curb rising prices. Stocks in the region were flat.
The STOXX 600 saw its second straight month of decline as European markets grappled with an energy and livelihood crisis.
A sudden shutdown of Russian gas supplies to Europe has also fueled fears over the possibility of power rationing and potential winter blackouts, with analysts predicting a deeper recession for the euro zone.
“In the short term, we are very bearish on eurozone equities versus US equities because they face major energy and geopolitical risks over the winter,” said Xavier Chapard, strategist at La Banque Postale Asset Management.
London’s FTSE 100 index fell 0.4% ahead of what is likely to be the Bank of England’s second big rate hike later in the day.
Travel and leisure stocks also fell 1.6%, with French hotel group Accor falling 7.0% after JPMorgan downgraded its rating on the stock to “underweight” amid fears it might not be up next year the previous level of profitability can return.
Spanish bank Sabadell rose 4.0% after receiving indicative bids from France’s Worldline, Italy’s Nexi and US firm Fiserv for its payments arm. Three sources said the deal was valued at up to 400 million euros ($393.64 million). ($1 = 1,0160 euros) (Reporting by Shreyashi Sanyal and Johann M. Cherian in Bengaluru; Editing by Saumyadeb Chakrabarty)