Home > Business > European stocks tumble, tracking Wall Street losses, as Fed’s hawkish turn reveberates

European stocks tumble, tracking Wall Street losses, as Fed’s hawkish turn reveberates


European stocks tumbled Friday, with banks and energy companies leading declines, as investors continued to absorb a hawkish turn by the Federal Reserve and Wall Street stocks dropped.

The Stoxx Europe 600 index
down 0.3% so far this week, went from modest losses to a 1.2% drop on Friday, with the German DAX

down 1.5%, the French CAC 40

off 0.6% and the FTSE 100

down 1.1%. The euro

fell 0.3% to $1.1866, while British pound

dropped 0.6% to $1.3839 after disappointing U.K. retail sales data. A surge in the dollar weighed on those currencies.

U.S. stocks



fell in early trading on Friday, as investors switched out of reflation trades in favor of technology names, echoing Thursday’s action.

The Fed was viewed as taking a slightly hawkish turn on Wednesday after its summary of economic projections showed two interest rate increases in 2023, and its admission that it has begun talking about when to slow the rate of bond purchases.

“Logically, in an environment where the pace for interest-rate increases was brought forth, someone would have expected Nasdaq to underperform notably, as the value of high-growth tech stocks is highly affected by changes in interest rates,” said Charalambos Pissouros, senior market analyst at JFD Group, in a note to clients.

“Higher interest rates mean lower present values for such firms. Nonetheless, it seems that investors rushed into adding such stocks to their portfolios, perhaps to take advantage of the limited time left for low interest rates,” said Pissouros.

Also on Thursday, the U.S. dollar soared and commodity prices tumbled, though that action seemed to be calming down on Friday, with a bounce for hard-hit gold
Tumbling bond yields was another reaction. The yield on the 10-year U.S. Treasury 

 slipped further to 1.4888%. The yield saw its sharpest slide since June 4 between Wednesday and Thursday.

Read: Why the U.S. dollar is soaring — and what’s next — after Fed’s change in tone

Most sectors were in the red, led by financials, with HSBC


down 2.7% and BNP Paribas

slumping 4.7%. Energy stocks fell as TotalEnergies



and Royal Dutch Shell

fell 4% as those reflation trades unwound.

Not helping was data showing U.K. retail sales fell 1.4% in May, driven by decreases at food stores and on the heels of a sharp rise in the previous month, the Office for National Statistics said Friday. Economists polled by The Wall Street Journal expected retail sales to increase 1.6%.

Shares of Tesco

fell almost 3%, after the British grocer reported a 1% rise in retail sales 1% on the year on a comparable basis and said that its profit outlook for the full year remains unchanged.

“Tesco’s first quarter numbers look sluggish, but that’s because they’re lapping the unprecedented demand triggered by the pandemic this time last year,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, in a note to clients.

Shares of Kerry Group

rose 1% after the Ireland based food company said late Thursday that it will sell its consumer foods’ meats and meals business in the U.K. and Ireland to Pilgrim’s Pride

for 819 million euros ($975.1 million).

Source link

TAGS , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,
Hi guys, this is Kimmy, I started LicensetoBlog to help you with the latest updated news about the world with daily updates from all leading news sources. Beside, I love to write about several niches like health, business, finance, travel, automation, parenting and about other useful topics to keep you find the the original information on any particular topic. Hope you will find LicensetoBlog helpful in various ways. Keep blogging and help us grow as a community for internet lovers.