European markets were sharply lower Thursday morning, following steep losses in the U.S. overnight amid fears over rapidly rising interest rates and an expected slowdown in global growth.
The pan-European Stoxx 600 was down by 1.8 percent during mid-morning deals, with financial services and technology stocks leading the losses. A dramatic sell-off on Wall Street in the previous session prompted the European benchmark to fall to its its lowest level in more than 20 months.
Global equity markets have tumbled on the back of heightened fears about global economic growth and rising interest rates. The International Monetary Fund (IMF) warned earlier this week that simmering trade tensions, such as those between the U.S. and China, could lead to a “sudden deterioration in risk sentiment, triggering a broad-based correction in global capital markets and a sharp tightening of global financial conditions.”
Meanwhile, U.S. Treasury yields have climbed to multi-year highs this week, although they pared gains late into Wednesday’s trading session.
As a result, most of Europe’s stocks were trading lower on Thursday. Britain’s WH Smith plummeted to the bottom of the index after announcing new plans to restructure its high street stores. Shares of the London-listed stock were down more than 12 percent on the news.
Britain’s Hays also tanked over 11 percent after the recruitment agency warned currency headwinds could hit its fiscal 2019 year.
Meanwhile, Dialog Semiconductor rose to the top of the index Thursday morning. The company’s shares soared after it announced a new $600 million deal with Apple.
Market players are also digesting new comments from President Donald Trump. On Wednesday, he criticized the U.S. Federal Reserve once again, calling the central bank “crazy” for its insistence on hiking rates. Trump also commented on the plunge in markets, calling it a “correction that we’ve been waiting for a long time.”
Back in Europe, Brexit is largely in focus after the European Union’s chief Brexit negotiator, Michel Barnier, struck an optimistic tone on a deal for the U.K.’s eventual withdrawal from the bloc, saying an agreement was achievable as soon as next week. Barnier stressed, however, that the U.K. remaining in the customs union would be the best possible solution to avoiding a hard border between the Irish mainland and Northern Ireland. Both the euro and the British pound bounced against the dollar on Barnier’s comments Wednesday, and were up 0.4 and 0.27 percent respectively on Thursday morning.
In corporate news, German carmaker BMW is investing $4.2 billion in its joint venture with Chinese firm Brilliance Auto, giving it a majority stake.