European stocks were under pressure on Friday, with the main index poised for its worst week since October 2020, as volatility on Wall Street and concerns over the timing of U.S. interest rate hikes has whipsawed investors.
The Stoxx Europe 600 index SXXP, -1.53% fell 1.6% to 462.81, the first losing session in three, but in a week that began with a 3.6% plunge. As of Thursday, the index was down 2.4%. Elsewhere, the German DAX DAX, -1.94% fell 2%, the CAC 40 PX1, -1.84% dropped 1.7% and the FTSE 100 index UKX, -1.23% fell 1.3%.
U.S. stock index futures pointed to a weak session for Wall Street ahead, despite upbeat results from technology giant Apple.
Fresh economic data showed Germany’s economy contracted in the fourth quarer owing to higher COVID-19 cases and restrictions, the German Federal Statistical Office reported Friday. GDP fell an adjusted 0.7%, which was worse than expectations for a fall of 0.5% in a poll of economists by The Wall Street Journal.
France’s economy expanded by a far-slower pace of 0.7%, following 3.1% growth in the previous quarter.
The European Central Bank and Bank of England will both hold monetary policy meetings next Thursday, on the heels of this week’s Fed meeting that left investors with the impression that interest rate hikes will indeed begin in March.
“The Fed meeting this week has turned the ECB meeting on Thursday next week much more interesting than anticipated from a market perspective. While we do not expect the meeting to bring significant new signals to the market, attention to the elevated inflation and even more data dependence as well as the difference to Fed will be in focus,” said a team at Danske Bank led by chief strategist, ECB and fixed-income research, Piet Haines Christiansen.
Among companies in focus, shares of Signify LIGHT, +12.03% climbed 11% to the top of the Stoxx 600 after results from the Dutch multinational lighting company. “While Q4 looks to have been boosted by the delivery of delayed orders, and some supply chain constraints look set to persist into 2022, the better than expected 2022 growth guidance from this higher 2021 base is still encouraging,” said a team of Citi analysts led by Martin Wilkie.
H&M HM.B, +3.79% shares climbed 3% after the Swedish fast-fashion retailer said it intends to refocus on growth, after posting a forecast-beating rise in fourth-quarter net profit and sales that returned to pre-pandemic levels.
Henkel shares HEN3, -10.29% tumbled 9% after the German home and personal-care products company 2022 targets disappointed investors. The company also said it intends to merge its laundry-and-home-care and beauty-care divisions into one unit to be called Henkel Consumer Brands, and will launch share-buybacks worth up to one billion euros ($1.11 billion).
UniCredit shares UCG, -1.31% fell 1.6% after the Italian banking giant reported a bigger loss in the fourth quarter of 2021, though higher-than-expected revenue.
Automakers were under pressure, with Volvo VOLCAR.B, -6.12% leading the way south as the Swedish truckmaker posted better-than-expected earnings, but cautioned of continued production stoppages due to parts shortages and disruptions to the supply chains.