Markets

European Stocks Close Lower on Rate Hike Jitters, Hawkish Fed Comments

Joshua Roberts | Reuters
  • U.S. inflation came in at an annual 7.5% in January, fresh data revealed on Thursday, far ahead of expectations and marking the highest year-on-year rise in consumer prices since 1982.
  • Risk sentiment was then further dampened when St. Louis Fed President James Bullard acknowledged that the reading had rendered him "dramatically" more hawkish.
  • Earnings reports continue to drive individual share price movement in Europe.

LONDON — European stocks fell on Friday after a hotter-than-expected U.S. inflation print and hawkish remarks from a Federal Reserve official prompted expectations of more aggressive interest rate hikes.

The pan-European Stoxx 600 closed down 0.6%, with tech shares shedding 2.2% to lead the losses as most sectors and major bourses slipped into negative territory.

U.S. inflation came in at an annual 7.5% in January, fresh data revealed on Thursday, far ahead of expectations and marking the highest year-on-year rise in consumer prices since 1982.

Risk sentiment was then further dampened when St. Louis Fed President James Bullard, a member of the Fed's rate-setting committee, acknowledged that the reading had rendered him "dramatically" more hawkish.

Bullard said he's now hoping for a full percentage point of interest rate rises in the first half of the year.

Still, several Fed officials are pushing back against such calls for super-sized rate hikes, suggesting the central bank is likely to embark on a more measured path.

Earnings reports continue to drive individual share price movement in Europe. British food and beverage ingredients company Tate & Lyle jumped 9.5% toward the top of the Stoxx 600 after posting strong quarterly results.

Swedish engineering company Sweco climbed almost 9% after its fourth-quarter earnings.

At the bottom of the European blue chip index, Spanish utilities firm Naturgy Energy plunged 12% after announcing a plan to split the company into two.

Meanwhile, German food delivery company Delivery Hero slumped another 12% Friday, as analysts at Barclays and JPMorgan cut their price targets on the stock following weak 2022 earnings guidance.

On Wall Street, stocks extended their declines from Thursday as U.S. bond yields climbed, with traders debating the policy direction of the Fed.

On the data front, the British economy grew 7.5% in 2021, official figures revealed Friday, rebounding from its historic 9.4% plunge in 2020 when pandemic restrictions stifled activity.

German inflation came in at an annual 4.9% year-on-year in January.

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- CNBC's Ryan Browne and Steve Liesman contributed to this report

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