China, worries about rate hikes push European stocks to 1-month closing low – Metro US
China, worries about rate hikes push European stocks to 1-month closing low – Metro US

China, worries about rate hikes push European stocks to 1-month closing low – Metro US

(Reuters) – European equities closed at nearly a month’s low on Friday as a cocktail of negative factors from China’s COVID lockdowns to concerns about rapid interest rate rises dampened sentiment globally.

The pan-European STOXX 600 fell 1.8% to 453.43 – its weakest finish since March 25th.

The basic resources sector, which houses global miners like Glencore and Rio Tinto, fell 3.6% as metal prices were hit by lockdowns in China’s largest metal consumer. [MET/L]

Meanwhile, weak earnings from UK discount retailer B&M and a worse-than-expected retail sales survey in March drove retailers down 3.7%.

Overall, world equities hit a five-week low as investors feared that rapid interest rate rises in the US, UK and the eurozone in the face of rising inflation would weigh on economic growth.

US Federal Reserve Chairman Jerome Powell said on Thursday that a 50 basis point rise in interest rates “will be on the table” when the bank meets on April 3-4. May, while the European Central Bank is likely to raise interest rates before the end of the year. That’s what boss Christine Lagarde told CNBC on Friday.

“The market had apparently adapted to a faster pace of increases, but the view now is that if Powell is happy with 50 basis points, then it provides coverage for others to call for even faster tightening,” said Chris Beauchamp, head of the market. analyst at online trading platform IG.

“This has cut the basis down from the rise in equities in recent days and suggests that the second half of April will be just as tough as the first for most equities.”

Traders increased their bets that the ECB would raise its key interest rate – currently at -0.50% – by around 85 bps at the end of the year, up from around 70 bps on Thursday. [GVD/EUR]

The focus was also on France’s vote on Sunday’s presidential election, with President Emmanuel Macron possibly extending his lead over far-right challenger Marine Le Pen.

France’s CAC 40 closed 2.0% lower, along with broad sales, but performed better on a weekly basis on expectations that Macron would win its re-election bid.

There were also some disappointments in earnings. Kering fell 4.3% after posting low sales on its crown jewel Gucci, which was hit by lockdowns in China.

Germany’s SAP lost 2.0% after marking a revenue hit of 300 million euros ($ 325.26 million) from their Russia exit.

The Swedish hygiene and health company Essity rose 13.3% after earnings in the first quarter exceeded expectations.

(Reporting by Anisha Sircar in Bengaluru; Editing by Shounak Dasgupta, Kirsten Donovan)

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