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European markets close lower as rate hike fears resurface; euro hits dollar parity

Elliot Smith
Toby Melville | Reuters

LONDON — European markets closed lower on Monday as fears of more aggressive interest rate hikes from the Federal Reserve and the European Central Bank returned to the fore.

European markets


The pan-European Stoxx 600 provisionally ended down 1%, with autos falling 3.9% to lead losses as almost all sectors and major bourses traded in negative territory.

Risk sentiment was dampened by hawkish signals from ECB policymakers, with Bundesbank President Joachim Nagel telling a German newspaper that the ECB must continue hiking interest rates even as recession risks in Germany grow.

Minutes from the ECB's most recent policy meeting will be published Thursday, while investors will be paying close attention to euro zone flash PMIs due on Tuesday.

Shares in Asia-Pacific closed lower on Monday as bearish sentiment prevailed, though Chinese markets rose after China's central bank cut its benchmark lending rates.

U.S. stocks fell in early trade after the S&P 500 snapped a four-week winning streak on Friday, as Wall Street looks ahead to Fed Chairman Jerome Powell's Friday comments on inflation at the central bank's annual Jackson Hole economic symposium.

"We expect the market to approach the Fed's Jackson Hole meeting fearing a hawkish message that could drive a sharp risk-off move. However, we think the message will be more nuanced, and possibly even reassuring," said Steve Englander, head of global FX research and North America macro strategy at Standard Chartered.

"For the Fed, getting inflation down towards targets is non-negotiable. Chair Powell is likely to state that the Fed will raise rates as far as it takes, and for as long as it takes, to lower inflation."

There are no major corporate earnings or economic data releases due out of Europe on Monday.

Novo Nordisk up 5%, Just Eat Takeaway down 9%

Novo Nordisk shares were up 5% to lead the Stoxx 600 by mid-afternoon, after the Danish pharmaceutical company announced positive results from a phase two trial of its drug CagriSema in people with type 2 diabetes.

At the bottom of the index, Just Eat Takeaway dropped 9% as investors took profits from a substantial rally at the end of last week, which came on the back of its 1.8 billion euro ($1.8 billion) sale of a one-third stake in Latin American delivery app iFood.

- Elliot Smith

U.S. stocks 'by far in the best position' and Europe faces 'winter of discontent,' strategist says

U.S. stocks 'by far in the best position' and Europe faces 'winter of discontent,' strategist says
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U.S. stocks 'by far in the best position,' Europe faces 'winter of discontent,' strategist says
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Euro slips back to dollar parity

The euro briefly slipped below parity with the U.S. dollar on Monday for the first time since mid-July, as euro zone recession fears resurfaced.

As of 9:15 a.m. London time, the common currency had recovered fractionally and was trading at exactly $1.

Uniper down 10%, Fresenius up 5%

German utility Uniper fell 10.3% in early trade amid warnings of further cuts to Russian gas supply to Europe, which have already pushed the company to seek a state bailout.

At the top of the Stoxx 600, shares of Fresenius rose 5.3% after the German health care group announced the appointment of new CEO Michael Sen from Oct. 1, replacing Stephan Sturm.

- Elliot Smith

China trims lending rates again, one week after surprise cuts in key rates

China trimmed its key lending rates again on Monday, one week after it cut two interest rates in a surprise move.

The moves are seen as an attempt to revive credit demand and fire up the economy hurt by extended Covid lockdowns and property debt problems.

The People's Bank of China cut its five-year loan prime rate by 15 basis points to 4.30% from 4.45%, and lowered its one-year loan prime rate by 5 basis points to 3.65%.

- Su-Lin Tan

Credit Suisse names new CFO and COO

Credit Suisse has named Dixit Joshi as its new chief financial officer from Oct. 1 and Francesca McDonagh as group chief operating officer from Sept. 19.

The latest top management reshuffle comes after the appointment of Ulrich Koerner as CEO last month, replacing Thomas Gottstein, as the embattled lender looks to overhaul its business model following a string of scandals and substantial quarterly losses.

Joshi has been group treasurer at Deutsche Bank for the last five years and replaces David Mathers, who is stepping down, while McDonagh was previously announced as CEO of the EMEA region at Credit Suisse.

- Elliot Smith