European shares fell for a fifth straight session on Tuesday, with investors becoming jittery before next week’s referendum in Britain on its membership of the European Union and a two-day meeting of the Federal Reserve starting later in the day.
Swiss money manager GAM Holding fell nearly 18 per cent to a 4-1/2 year low after warning it expects a roughly 50 per cent year-on-year fall in first-half underlying profit before tax, mainly due to lower performance fees.
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The pan-European FTSEurofirst 300 index fell 1.1 per cent to 1,270.68 points by 0815 GMT after hitting its lowest since February. The STOXX Europe 600 was also down 1.1 per cent, while the European miners fell 1.8 percent, the top sectoral decliner, tracking weaker metals prices.
The Euro STOXX 50 volatility index, Europe’s main gauge of equity market investor anxiety known as the VSTOXX index, surged to a four-month high of 36, against 20 about two weeks ago, over Brexit fears.
“Brexit concerns are pushing the volatility index higher and particularly hitting financials. This increased volatility is likely to last at least until the referendum,” Koen De Leus, senior economist at KBC in Brussels, said.
Two opinion polls published by ICM showed on Monday that Britain’s “Out” campaign had widened its lead over the “In” camp ahead of the June 23 referendum on Britais EU membership, adding to investors’ general nervousness.
The European banking index was down 0.7 per cent, taking total losses to more than 26 per cent this year. It is the worst performing sector in Europe in 2016.
Uncertainty over this week’s two-day Fed meeting, starting later on Tuesday, also weighed on markets. The US central bank is widely expected to leave rates unchanged after the much weaker-than-expected May non-farm payrolls report, analysts said.
“Markets will continue to price in a worst case scenario meaning further declines are likely in the days ahead except if there would be a substantial shift in public opinion or some kind of verbal intervention from politicians or central bankers to bring back calm into the markets,” Markus Huber, trader at City of London Markets, said.