Germany leads European stocks lower – Markets

LONDON (Reuters) – European stocks fell on Friday, with Germany leading as investors worried about negative data on consumer sentiment in the continent’s biggest economy, while a reiterated hawkish stance by the president of the Federal Reserve, Jerome Powell, added to the fears.

The pan-European STOXX 600 slid 1.7%, closing down 2.6% for the week. Germany’s DAX index ended down 2.3%, with a weekly decline of 4.2%, making it its worst week in more than two months.

German consumer confidence is expected to hit a record high for the third month in a row in September, according to a new survey, as households brace for rising energy bills. On the other hand, French consumer confidence rose unexpectedly in August.

“Germany’s recession fears have become more intense with the confidence index falling to a new all-time high…Germany is particularly dependent on external energy producers, and people are saving at an 11-year high, this which shows that consumers are taking precautions in the event of a worst-case scenario,” said Sophie Lund-Yates, principal equity analyst at Hargreaves Lansdown.

Powell’s comments offered jittery stock markets no respite, as he noted that the U.S. economy would need tight monetary policy “for a while” before inflation was brought under control, which meant slower growth, a weaker labor market and “a bit of pain” for households. and businesses.

“In less than nine minutes, Chairman Powell convinced the market to avoid overlooking his unwavering determination to move into highly restrictive territory and stay there for as long as necessary,” said Jeff Klingelhofer, co-head of investments at Thornburg Investment Management.

“Chair Powell has thrown cold water on the market’s belief that the Fed will take a mildly restrictive policy and then pause.” Eurozone bond yields rose further on Powell’s comments. Borrowing costs across the bloc had already risen after a Reuters report that the European Central Bank may be debating a 75 basis point rate hike in September.