European markets took a nosedive to their lowest point in over two weeks on Friday, echoing global apprehension triggered by hawkish remarks from select U.S. Federal Reserve officials and escalating tensions in the Middle East.
The broad STOXX 600 plummeted by 1.2%, marking its most significant decline since October 2023.
Benchmark indexes across major European economies, including Germany, France, Italy, and Spain, also witnessed drops exceeding 1%.
“Investor expectations for rate hikes haven’t changed that much… it really is just noise,” commented Thomas Gehlen, a senior market strategist at Kleinwort Hambros. Despite lagging behind the U.S. economically, European equities are perceived as more attractively valued.
The prospect of a rate cut by both the ECB and the Fed has been a key driver for gains in developed market equities since late 2023. However, with Friday’s downturn, the STOXX 600 braces for its worst week since October 2023.
Travel and leisure stocks spearheaded sectoral losses with a 1.8% decline, influenced by soaring Brent crude prices amid heightened geopolitical risks in the Middle East.
Notable declines were observed in shares of SoftwareOne (-1.1%), Holcim (-1.5%), and Bureau Veritas (-2.5%), each facing their unique challenges.
Furthermore, Shell anticipated significantly lower results from its liquefied natural gas trading business in the first quarter of 2024, offset by higher oil prices.
The focus now shifts to the crucial March U.S. jobs report, anticipated later in the day, as investors seek further market cues amidst ongoing uncertainties.
