European Stocks Fall on Fed Rate Outlook Worries; Adyen Plunges
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(Bloomberg) — European stocks extended declines after minutes from the Federal Reserve’s policy meeting in July suggested further interest-rate increases could be needed to contain inflation.
The Stoxx Europe 600 fell 0.6% by 8:18a.m. in London, declining for a third session. Construction and materials stocks led the retreat, while while the basic resources sector gained.
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Among individual stocks, Adyen NV plunged more than 20% after reporting first-half earnings that missed estimates, with the Dutch payment company’s hiring push continuing to hurt its profit margin. Swiss building materials firm Geberit AG declined after reporting second-quarter results that analysts said represented a “sizeable” miss.
Minutes from the Fed’s July policy meeting showed that most participants continued to see “significant upside risks to inflation, which could require further tightening of monetary policy.” However, two officials favored leaving rates unchanged or “could have supported such a proposal” instead of the rate hike authorized by the Federal Open Market Committee at the conclusion of the meeting.
“The minutes came across as reasonably hawkish, not altogether surprising given recent commentary from various Fed officials,” said Michael Hewson, chief market analyst at CMC Markets. “However, there was some surprise that only two members appeared to support keeping rates unchanged.”
Investors remained concerned about signs of weakness in Chinese markets. Zhongzhi Enterprise Group Co., the Chinese shadow banking giant whose liquidity crisis has fanned fears about financial contagion, is planning to restructure its debt and hired KPMG LLP to conduct an audit of its balance sheet, according to people familiar with the matter.
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—With assistance from Farah Elbahrawy.
