Askume, Sept 19 – European utility stocks fell on Thursday as investors turned to less defensive shares after the Federal Reserve cut interest rates by 50 basis points on Wednesday.
The STOXX 600 Utilities Index (.SX6P), which tracks the performance of European utility companies, was down 1.8% by 0408 GMT. While most sectors in the continental STOXX 600 Index (.STOXX) rose 1.4%, the utilities and telecoms sectors did not follow the overall bullish trend.
Spain’s Iberdrola (IBE.MC) and Italy’s Enel (ENEI.MI) , two of Europe’s biggest utilities companies, fell 1.3% and 1.7%, respectively. Engie (ENGIE.PA) fell 2.2%, lagging gains in France’s CAC 40 index.(.FCHI) rose 2.3% . Germany’s largest power producer RWE (RWEG.DE) The DAX index fell 3.8%(.GDAXI) dragged the index down 1.6%.
“Defensive stocks of utility companies have been punished. Through the industry rotation effect, investors are moving from defensive stocks to more cyclical stocks,” said Anoud Palis, an analyst at China Investment Corporation.
Morning Star analyst Tancred Fulop said Thursday’s losses could also be due to the normalisation of power prices, which have been falling over the past few days.
