Stock Groups

European markets trade lower after Fed’s Powell signals a rate hike next month


After the Federal Reserve Chair’s announcement, European stock markets fell Friday morning Jerome PowellA half-percentage rate increase is possible for the next month, according to officials.

The pan-European Stoxx 600Shortly after the opening of bourses, the stock market plunged by 1%, with retail, technology, and oil and natural gas sectors suffering the most severe losses.

Friday’s open market in Europe follows a dramatic turn in U.S. stock exchanges on Thursday. Major averages closed lower, wiping out gains earlier.

The market is now experiencing a more steep and accelerated rate of change than it was a week ago, or a month ago.

Daniel Morris

BNP Paribas Asset Management, Chief Market Strategist

Jerome Powell (Federal Reserve Chair) spoke out earlier Thursday to discuss the possibility that there will be a bigger-than-usual increase in interest rates next month. He did so by provoking markets. Powell spoke during an International Monetary Fund Panel moderated CNBC’s Sara Eis. He stated that controlling inflation is his top priority. “absolutely essential.”

He said, “I’d say that 50 basis points will also be available for the May meeting.” 

Powell’s remarks prompted a jump in U.S. Treasury yields, which also increased. shares in Asia fell Friday.

The markets have to accept a steeper and more rapid rate path that they didn’t expect a week, month, or three months back. So I think there still is that adjustment taking place,” Daniel Morris, chief market strategist at BNP Paribas Asset Management, told CNBC Friday.

I believe the most important question regarding the future direction of markets will be “When does this process end?” What date have we fully priced in what the rates would be over the next year? Once that happens (and hopefully it’s quickly), then markets will stabilize.

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Stock moves

The retail sector is B&MMore than 5% of the company’s shares fell on the news that its CEO would be retiring in 2019. Additionally, retail sales in Britain fell by more than was expected during March according to data.

Samuel Tombs of Pantheon Macroeconomics in the U.K. stated in a Friday note that March’s large drop in retail sales volumes “looks like the start of an period of weakness for consumers’ spending rather than just one blip.”

French Luxury Retailer shares KeringThe stock dropped by more than 5 percent amid worries about its performance in China where investors are concerned about a zero Covid policy.

SAPFriday’s earnings were released, indicating a decrease in its revenues due to Russia exit. According to the German software company, its decision to exit Russia after its invasion of Ukraine would have a negative impact on its revenue of 300 million euros (325 million).

Speaking to CNBC Friday, the company’s CEO Christian Klein told CNBC its cloud subscription revenues were “very sticky,” and said its transformation plan was ahead of schedule.

French elections

French voters will head to the polls on Sunday. The second — and final — round of the election puts incumbent Emmanuel MacronMarine Le Pen, leader of an anti-immigrant party, is being reprimanded

In a note Thursday, Goldman Sachs described the election as a decisive moment for France’s policy path. 

Sven Jari Stehn led the analysis.

These reforms have been largely incorporated in our forecasts. We would anticipate an institution impasse if M. Le Pen is elected. This could be due to the lack of a parliamentary majority next June’s legislative election and substantial friction with EU partner countries.

— CNBC’s Yun Li contributed to this report.