Europe midday: Shares pare losses after Fed-inspired slump
European shares pared losses at midday after a slump at the opening on Thursday, reacting to a deluge of corporate news following hawkish comments on interest rate timings from US Federal Reserve chairman Jerome Powell.
The pan-European Stoxx 600 was 0.19% lower while Spain's IBEX and Britain's FTSE 100 bucked the trend to post gains. The benchmark continental index was down almost 1.5% in early deals.
“European markets are under pressure after the Fed prompted Wall Street to give back earlier gains in the session. All sectors in Europe are in the red with travel and leisure leading the declines," said Victoria Scholar, head of investment at Interactive Investor.
"By highlighting the strength of the labour market and the wider US economy, Powell implied that robust underlying economic fundamentals could withstand aggressive action against inflation. In this sense, his presser was viewed as relatively hawkish, prompting equity markets to reverse earlier gains and the treasury curve to flatten."
"Powell also refused to rule out hiking rates at every FOMC meeting this year to combat 40-year high inflation, in another hawkish tilt while the markets are now pricing in between four and five rate hikes in 2022.”
In equity news, shares in iconic UK boot maker Dr Martens plunged almost 13% as revenue growth slowed in its third quarter, after a drop in wholesale business as it prioritised inventory for ecommerce and retail stores channels. The stock has fallen by more than a third in the last month.
German business software group SAP fell 6% after the company said it had agreed to buy a majority stake in privately held US fintech firm Taulia.
French-Italian chipmaker STMicroelectronics gained after announcing plans to double its investments this year, buoyed by high demand that drove its earnings to beat quarterly expectations.
Deutsche Bank climbed 5% after making its biggest profit since 2011 last year, defying expectations for a loss in the fourth quarter following revenue gains at its investment bank during a dealmaking boom.
EasyJet flew lower after the budget airline said the Omicron Covid variant was weighing on trading but forecast a strong pickup in demand next summer when capacity returns to near pre-pandemic levels.