European Stocks Close Lower As Rate Hike Concerns Resurface

(RTTNews) - European stocks closed lower on Tuesday as concerns about interest rate hikes resurfaced after some Fed officials said the U.S. central bank needs to raise interest rate beyond 5% and hold it at higher levels for a longer duration in order to rein in inflation.

San Francisco Fed president Mary Daly said she expects interest rates to rise beyond 5 percent this year. Atlanta Fed president Raphael Bostic also said interest rates need to be raised above 5 percent.

Meanwhile, Fed Chair Powell emphasized the need for the central bank to be free of political influence while it tackles high inflation. Powell noted in a speech delivered to Sweden's Riksbank that stabilizing prices requires making tough decisions that can be unpopular politically.

The pan European Stoxx 600 fell 0.59%. The U.K.'s FTSE 100 dropped 0.39%, Germany's DAX ended 0.12% down, and France's CAC 40 drifted down 0.55%. Switzerland's SMI ended 0.45% down.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Ireland, Netherlands, Norway, Russia, Sweden and Turkiye closed weak.

Iceland, Poland, Portugal and Spain ended higher, while Czech Republic and Greece settled flat.

In the UK market, RS Group ended nearly 5% down. British American Tobacco, Airtel Africa, Ocado Group, Next, Haleon, Rolls-Royce Holdings, Anglo American Plc, Frasers Group and BT Group lost 2 to 4%.

Admiral Group climbed nearly 3%. Convatec Group, Antofagasta, RightMove, ABRDN, Smith & Nephew, M&G, Burberry Group, Whitbread, Fresnillo and Pearson gained 1 to 2%.

In Paris, Eurofins Scientific ended more than 3% down. Unibail Rodamco, Saint Gobain, Airbus Group, Essilor, Legrand, Michelin, Societe Generale, Capgemini, Dassault Systemes, Veolia and BNP Paribas lost 1 to 3%.

Renault surged nearly 2.5%. WorldLine gained about 1.7%, while Thales, Stellantis, Danone and Carrefour gained 0.5 to 1.1%.

In the German market, Covestro, Zalando, HeidelbergCement, Fresenius and BASF lost 2 to 3.4%. Puma, Adidas and Henkel also declined sharply.

Bayer rallied more than 4%. Fresenius Medical Care surged 2.3%, while Deutsche Boerse, Qiagen and Porsche Automobil gained 1.5 to 1.8%.

In economic news, Bank of England Chief Economist Huw Pill said the slowdown in the UK economy together with the tight labor market conditions will put a lid on domestic inflationary pressures and weaken the risk of persistent inflation.

But the extent to which an easing in the labor market induced by monetary tightening will weigh against inflationary pressures will depend on the wider context, Pill noted.

Results of the KPMG/REC Report on Jobs survey, compiled by S&P Global, showed permanent placements in the United Kingdom decreased further at the end of the year 2022, as hiring activity was dampened by the rising economic uncertainty, low candidate numbers along with the squeeze on clients budgets.

UK retail sales increased notably at the end of the year, reflecting higher prices and strong Christmas shopping, data released by the British Retail Consortium and accountancy firm KPMG revealed Tuesday. Like-for-like sales grew 6.9 percent on a yearly basis in December, faster than the 4.2 percent rise in November.

Data released by the statistical office INSEE showed France's industrial production rebounded at a stronger-than-expected pace in November as operations returned to normal after the labor strike in refineries. Industrial output climbed 2% from October, when it decreased by a revised 2.5%. Production was expected to grow by a modest 0.8%.