European stock markets closed lower Wednesday as investors around the world continued to assess inflation concerns and Russia’s incursion into Ukraine. The pan-European Stoxx 600 closed down 1%, with nearly all sectors and major bourses in negative territory. Utilities stocks fell 2.5% and led the losses, while oil and gas stocks bucked the downward trend, gaining 2%. The main economic news of the day came from the UK, where Finance Minister Rishi Sunak announced an immediate cut in fuel taxes. UK inflation reached 6.2% in February, the highest level since March 1992.
U.S. stocks slipped Wednesday as oil prices rose and inflation fears resurfaced. The yield on 10-year U.S. Treasury bonds rose above 2.41% on Wednesday, a level not seen since May 2019. General Mills rose nearly 2.5% after the food maker reported better-than-expected quarterly profit Wednesday and raised its full-year outlook. Adobe shares fell 9.3% after the company forecast lower-than-expected profit and revenue for its second fiscal quarter.
Asia-Pacific markets struggled for direction this morning as investors reacted to yesterday’s 5% rise in oil prices. Shares of Chinese tech giant Tencent fell about 3% in Hong Kong after the company reported the slowest revenue growth in its history on Wednesday. Tencent also said it is “exploring” a financial holding for WeChat Pay if required by Chinese regulators. Shares of companies in the travel industry rose. Singapore Airlines and Sats, a provider of ground handling and in-flight catering services, each rose more than 2%.
Adobe shares slump 10%
Shares of Adobe fell about 10% Wednesday after the software company lowered its fiscal year estimates to reflect the impact of a sales freeze in Russia. Adobe had said on March 4, the first day of the quarter, that it had stopped selling new products in Russia and Belarus following Russia’s invasion of Ukraine. In its first-quarter earnings report after the market closed Tuesday, Adobe said it was reducing its annual recurring revenue guidance by $75 million for fiscal 2022 due to the pullback in the region.
Tencent posts slowest-ever revenue growth; impact of regulation will ease
Revenue at Chinese social media and gaming giant Tencent rose just 8% in the fourth quarter. This is the slowest growth since its IPO in 2004 and reflects regulatory requirements that have affected both its gaming business and advertising sales. China has frozen the approval of games and restricted playtime for children under 18 since August last year. This is part of Beijing’s efforts to tighten control over society and industry, including technology, after years of unbridled growth. The company, which posted its slowest annual revenue growth ever at 16%, said revenue from its online advertising business fell 13% in the fourth quarter. The company expects its ad business to return to growth in late 2022 after it adjusts to regulatory requirements. Total revenue rose to 144.2 billion yuan ($22.63 billion) in the quarter, below the 147.6 billion yuan average that 17 analysts had expected, data from Refinitiv showed.