European shares snap out four-week winning streak amid Fed jitters



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European shares snap out four-week winning streak amid Fed jitters

On Friday, a basket of European bourses had extended sharp declines into a second straight day, as a US Fed policymaker James Bullard’s hawkish remarks had jolted regional pan-European STOXX 600, snapping a four-week long winning streak amid growing likelihoods of an earlier-than-anticipated policy easing measures from the US Central Bank.

STOXX 600 fell 0.1 per cent on Thursday, putting an end to a straight nine -session-long winning streak in a row. In point of fact, this week’s steep decline in a deluge of European stock indices were almost entirely prodded by a US Fed policy meet which had forecasted at least two quarter-percentage point rate hike by end-2023 on Wednesday, a year earlier than expected.

Nonetheless, inflicting deeper wounds into market participants’ morale, a US Federal Reserve Policymaker James Bullard had told earlier in the day that he alongside six other Fed policymakers had forecasted a rate-hike as early as by late-2022, stoking frets of an early easing of fiscal stimulus.

Unlike the US Federal Reserve, following last week’s ECB (European Central Bank) policy meet, ECB Chair Lagarde had held on to a dovish monetary policy, however, had also raised an alarming bell over an inflation-surge.

European shares post weekly decline after hawkish US Fed projection

Citing statistics, on Friday’s European market closing bell, benchmark STOXX 600 tumbled as much as 1.6 per cent, marking up the worst intra-session plunge in more than five weeks with financials and commodity stocks leading the declines, while London’s blue-chip index FTSE 100 tottered as much as 1.90 per cent to 7,017.47.

In tandem, French CAC 40 had rounded off the day 1.46 per cent lower to 6,569.16, while Frankfurt’s DAX took a tattering header of 1.78 per cent to wind up the session at 15,448.04. Elsewhere in the Europe, Madrid’s benchmark IBEX 35 had been hit with a hefty whiplash of 1.80 per cent to 9,030.60, while Italy’s MIB shed 1.93 per cent to 25,218.16.

On the week, London’s FTSE 100 shrugged off 1.63 per cent and French CAC 40 lost 0.85 per cent, while Frankfurt’s DAX dropped 1.85 per cent. Besides, Madrid’s IBEX 35 fell 2.19 per cent over the week, while Italy’s FTSE MIB had reported a weekly percentage decline of 2.33 per cent.

Meanwhile, downplaying the impacts a hawkish US Fed projection, a head of strategy at TS Lombard, Andrea Cicione said, “The market has been polarised in certain positions. We’ve been very positive on financials and energy since last November and now we’re seeing a reversal of that as investors scale back.

But this is temporary phase; there’s definitely more upside for financials and energy, which are still relatively cheap.