European stocks fell for a third day on oil and technology losses

A graph of the German stock price index DAX is seen on the Stock Exchange in Frankfurt, Germany, September 14, 2022. REUTERS/Staff

Sept 15 (Reuters) – European shares gave up early gains to finish lower on Thursday, with energy and technology stocks falling sharply, as concerns about tighter monetary policy and geopolitical disruption shook risk sentiment.

The STOXX 600 index (.STOXX) closed 0.7% lower, extending losses to a third straight session. Energy stocks ( .SXEP ) fell 2.1 percent, worried about a decline in crude prices on demand.

Technology shares (.SX8P) fell 1.8% and were the biggest drags on the STOXX 600. The sector underperforms especially in a high interest rate environment as it puts pressure on future earnings.

Data out of the United States this week further strengthened the case for the hawkish Federal Reserve. The Fed is seen offering a third 75-basis-point hike next week, and the European Central Bank has signaled that it will hike that much further this month.

“The market is very volatile. There is a fight between the bulls and the bears and every data point that comes out gives more arguments for one or the other,” said Andrea Ciccion, head of strategy at TS Lombard.

“A strong (U.S.) labor market, strong consumerism, strong sales means the Fed has to go higher and that has caused the market to sell off. And so, geopolitics remains very volatile.”

China said on Thursday it would work with Moscow “to create stability and a positive force in a chaotic world” amid sanctions imposed on the West over Russia’s invasion of Ukraine. Fears of a war-torn gas crisis in Europe have seen EU leaders scramble to introduce support measures for companies and citizens. [nP8N30M02S]

European banks (.SX7P) rose 1.7%, supported by bets on higher interest rates. Morgan Stanley upgraded the banking sector to “overweight,” citing cheap valuations and stagnant earnings.

Spanish bank shares including Bancinter ( BKTMC ), Sabadell ( SABE.MC ) and Caixabank ( CABK.MC ) each rose more than 4 percent after Madrid said it was keen to avoid a dispute with the European Central Bank and could improve. Bank tax.

H&M ( HMb.ST ) fell 4.7% after the retailer posted lower-than-expected quarterly sales, as consumers tighten their belts amid energy and food bills and struggle to compete with rival Zara. Read more

Reporting by Shreyashi Sanyal, Shashwat Chauhan and Susan Mathew in Bengaluru; Editing by Devika Syamnath

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