# Sweden, UK lead European shares lower on rate-hike fears
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-08-15
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: UK and Sweden stocks lead European shares lower on
Meta Description: Stay informed on the latest market updates as UK and Swedish stocks fall amid concerns of high interest rates, impacting investor sentiment and global markets.
URL: https://financedigest.com/sweden-uk-lead-european-shares-lower-on-rate-hike-fearshtml

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# Sweden, UK lead European shares lower on rate-hike fears

By Shashwat Chauhan and Ankika Biswas

(Reuters) -UK and Swedish stocks led declines among European peers on Tuesday after data from both countries triggered worries about high interest rates, while China-exposed shares fell as Beijing’s policy support failed to boost investor sentiment.

The pan-European STOXX 600 index closed 0.9% lower, touching an over one-month intraday low, while both London’s FTSE 100 and Stockholm stocks fell over 1%.

British government bond yields shot up after data showed domestic basic wages hit a new record growth rate, boosting chances of further Bank of England [rate hikes](https://www.financedigest.com/global-shares-rise-dollar-rebounds-as-fed-seen-on-target-for-rate-hike.html "Global shares rise, dollar rebounds as Fed seen on target for rate hike").

“Despite signs of cooling labour market, the strength of wage growth – and in particular, private sector pay growth – will be worrying… this should leave the prospect of a 50-bps hike on the table for September” said Sanjay Raja, senior economist at Deutsche Bank in a note.

Another report showed Sweden’s pace of inflation held steady at 9.3% in July, still too high for the central bank to mull hiking rates again at its September meeting.

The China-exposed miners’ index lost 1.5%, hitting an over two-year low intraday, as base metal prices fell after data showed Chinese retail sales, industrial output and investment growing at a slower-than-expected pace.

Even as [China’s central bank cut key policy rates](https://www.financedigest.com/oil-prices-wobble-on-worries-over-china-economy-us-rate-path.html "Oil prices wobble on worries over China economy, US rate path"), analysts say more support is needed to boost a rocky post-pandemic recovery.

“A lot of the bad news has been priced in and we’re in a scenario where the worst news means more support is likely to be promised, but the rate cuts are not massively a surprise and so the market isn’t reacting very strongly to it,” said Giles Coghlan, chief market analyst at HYCM.

Heavily China-exposed luxury giants LVMH, Hermes and Kering fell around 1% each, with the luxury index down 1.2%.

HSBC, [Europe’s largest bank](https://www.financedigest.com/at-europes-big-banks-women-make-some-gains-despite-rose-exit.html "At Europe’s big banks, women make some gains despite Rose exit") doing business in China, dropped 3.4%, the biggest drag on the STOXX 600.

Sentiment also took a hit from stronger-than-expected U.S. retail sales data which stoked worries rates may stay higher for longer, weighing on Wall Street’s main indexes. \[.N\]

The benchmark STOXX 600 has come off its more than one-year highs hit in July, pressured by growing concerns over China’s economy and sharp movements in bond yields.

British retailer Marks & Spencer jumped 8.3% to top the STOXX 600 after raising its profit outlook, while Danish jewellery [maker Pandora added 2.7% after raising its full-year revenue outlook](https://www.financedigest.com/dulux-maker-akzo-nobel-lifts-outlook-on-easing-raw-material-costs.html "Dulux maker Akzo Nobel lifts outlook on easing raw material costs").

Embracer lost 5% after analysts pointed to a report revealing a previously unknown partner in a collapsed deal with the Swedish game maker.

Equity markets in Greece and Italy were shut on Tuesday for national holidays.

(Reporting by Shashwat Chauhan and Ankika Biswas in Bengaluru; Editing by Shounak Dasgupta and Bernadette Baum)


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