European stocks fell in early Friday trading after the Chairman of the Federal Reserve Jerome Powell said a half percentage point rate hike is “on the table” for next month.
European food Stoxx 600 fell 1% right after the exchange opened, with the retail, technology and oil and gas sectors posting the biggest losses.
Friday’s market open in Europe follows a significant U.S. stock market reversal on Thursday, with the main average closing lower and wiping out previous gains.
Markets are… having to digest a steeper rate path, much faster than they thought was the case a week ago, a month ago or three months ago.
Daniel Morris
Head of Market Strategy, BNP Paribas Asset Management
Earlier, on Thursday, Federal Reserve Chairman Jerome Powell commented on the possibility of a larger-than-usual rate hike next month, weighing on markets. Speaking during an International Monetary Fund panel moderated by CNBC’s Sara Eisen, Powell said that curbing inflation is key. “absolutely necessary. “
“I would say 50 basis points will come out for the meeting in May,” he added.
US Treasury yields also rose after Powell’s comments, while Stocks in Asia fell Friday.
“Markets are … having to digest a steeper rate path, much faster than what they thought was the case a week ago, a month ago or three months ago. So I think there’s still a correction going on,” Daniel Morris, chief market strategist at BNP Paribas Asset Management, told CNBC on Friday.
“I think the key question for the direction of the market will be: When will that stop? When will we have fully priced in, where the rate is going in a year. And I think once that happens, and hopefully that soon, then we’ll see real stability in the market.”
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In the retail space, B&M down more than 5% on news that the CEO will retire next year. Additionally, UK data showed a more-than-expected drop in retail volumes in March.
“The significant drop in March looks more like the beginning of a period of weakness in consumer spending, rather than just a mere one,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics. a blip of light”.
Shares of French luxury goods retailer Kering also fell more than 5% amid concerns about its sales performance in China, where the zero-Covid policy is making investors nervous.
SAP announced earnings on Friday, marking a hit in revenue from leaving Russia. The German software giant said its decision to leave Russia after the invasion of Ukraine is expected to result in a negative revenue impact of around 300 million euros ($325 million).
Speaking to CNBC on Friday, the company’s CEO Christian Klein told CNBC its cloud subscription revenue was “very steady” and said its plan to transition was ahead of schedule.
French election
French voters are heading to the polls on Sunday. The second – and final – round of the incumbent election Emmanuel Macron against the leader of the anti-immigrant party Marine Le Pen.
In a note on Thursday, Goldman Sachs described the election as a decisive moment for French policy.
“If Mr Macron is re-elected, we expect him to revive his reform agenda as a continuation of his pro-integration plan,” said analysts led by Sven Jari Stehn. him for Europe”.
“These reforms are to a large extent already incorporated into our current projections. If M. Le Pen is elected, we would assume institutional deadlock due to the likely lack of a parliamentary majority. Parliament in the legislative elections next June and significant frictions with EU partners.”
– CNBC’s Yun Li contributed to this report.
