Europe close: Stocks fall after hawkish remarks from Fed chief
By Alexander Bueso
Date: Friday 22 Apr 2022
(Sharecast News) - The prospect of faster interest rate hikes in the US sparked heavy losses in European shares on Friday after more hawkish remarks from the head of the US Federal Reserve and worrisome headlines from the war in Ukraine.
"The market had seemed to have adjusted to a faster pace of hikes, but the view is now that, if Powell is happy with 50 basis points, then it gives cover for others to call for even faster tightening," said IG chief market analyst Chris Beauchamp.
"This has cut the foundations from underneath the rally in stocks over recent days, and suggests that the second half of April will be just as tough as the first for most equities."
Europe's pan-regional Stoxx 600 fell 1.79% to 453.31, alongside a 2.48% drop on the German Dax to 14,142.09 and a 2.12% decline for the FTSE Mib to 24,279.63.
In parallel, euro/dollar gave back 0.51% to 1.0779, even as the yield on two-year German debt jumped by seven basis points to 0.28%.
Global markets were lower alongside after Federal Reserve chairman Jerome Powell said overnight that a 50-basis-point rate increase "will be on the table" when the bank meets on May 3-4.
Earlier on Thursday, European Central Bank vice president, Luis de Guindos, said he supported an end to bond purchases in July.
In equity news, shares in French group Kering fell after releasing downbeat sales at its Gucci brand, which was hit by lockdowns in China.
SAP slipped 0.92% after flagging a revenue hit of €300m because of its exit from Russia.
B&M European Value Retail fell 6.1% as CEO Simon Arora, who bought the UK chain in 2004, announced he was retiring next year.
Shares in Swedish hygiene products group Essity soared by 14% despite the company taking a write-down of 1.4bn Swedish crowns on its Russia assets and posting a drop in first-quarter earnings.
HomeServe shares surged by 15% after announcing on Thursday it was in talks with Canada's Brookfield Asset Management for a possible offer for the home repair services firm.
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