LONDON — European markets pulled back on Friday after a hotter-than-expected U.S. inflation print and hawkish remarks from a Federal Reserve official cemented expectations of more aggressive interest rate hikes.
The pan-European Stoxx 600 fell 0.9% by late morning deals, with travel and leisure stocks shedding 1.7% to lead losses as almost all sectors and major bourses slid into negative territory. Autos bucked the downward trend to add 0.7%.
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.
Earnings reports continue to drive individual share price movement in Europe. British food and beverage ingredients company Tate & Lyle jumped more than 8.5% to lead the Stoxx 600 after posting strong quarterly results.
At the bottom of the European blue chip index, German delivery firm Delivery Hero dropped another 9.9% after its 30% on Thursday, as investors balked at its 2022 guidance.
Shares in Asia-Pacific were mostly lower on Friday, with the exception of Japan’s Nikkei 225 and Topix indexes, while U.S. futures pointed sharply lower in early pre-market trade, indicating another rocky session on Wall Street after Thursday’s sell-off.
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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