European shares slid on Friday to end the week lower as a slew of US economic data fed into fears that central banks are far from finished hiking rates.
The STOXX 600 index fell 1.04 percent to 457.70, reversing early gains, after US inflation data came in hotter than expected and added to worries that the US Federal Reserve might have to keep interest rates higher for longer in the world’s largest economy.
“The Fed has much more work to do, and even if they only raise rates a couple more times, it is extremely unlikely that they will be cutting rates this year — as was consensus and in market-based pricing as recently as a few weeks ago,” Independent Advisor Alliance chief investment officer Chris Zaccarelli said.
Eurozone government bond yields rebounded to around their highest levels in more than a decade, while trader forecasts for the peak in European interest rates rose again to about 3.8 percent after the US data.
The pan-European index ended the week 1.42 percent lower, with mining stocks leading declines as metal prices eased on lacklustre demand in top consumer China and a stronger US dollar.
London’s FTSE 100 reacted similarly, falling 0.37 percent to 7,878.66, while logging a weekly decline of 1.57 percent, its worst such showing since the middle of December last year.
Data earlier in the day from Germany showed that Europe’s biggest economy contracted in the fourth quarter of last year as inflation and an energy crisis took a toll on household consumption and capital investment.
However, a GfK institute survey signaled that German consumer sentiment is set to improve for a fifth consecutive month next month as energy prices drop.
“Every day, there seems to be just enough contradictory economic data to keep us all guessing about exactly which box those central bankers will check when it comes to their next rates meeting,” AJ Bell head of financial analysis Danni Hewson said.
In earnings-driven news, Compagnie de Saint-Gobain SA gained 4.8 percent after the construction materials company posted record annual revenue that exceeded analysts’ expectations on strong growth in all its regions on Thursday.
Radiation therapy equipment Elekta jumped 9.2 percent to the top of the STOXX 600 after its third-quarter earnings beat expectations.
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