“European markets start the day on a somber note as gloomy global sentiment and cautious remarks from the Federal Reserve cast a shadow over investor confidence.”
European equity markets opened at a seven-month low on Friday, with the pan-European Stoxx 600 index down 1% in afternoon trading. Most sectors were in negative territory, with mining stocks experiencing the biggest drop of 2.4%, followed by travel and leisure, which fell 1.9%.
Federal Reserve Chairman Jerome Powell acknowledged signs of cooling inflation but emphasized the central bank’s commitment to its 2% mandate. Powell did not provide specific details about future policy actions but did not hint at a further interest rate hike either. The Fed had decided to keep interest rates steady at its last meeting in September, but it did suggest the possibility of one more hike before the end of the year.
Investors are also closely watching a summit between U.S. and European Union institutions happening in Washington. The leaders will discuss trade relations, and the outcome of the summit could have implications for the global markets.
Meanwhile, U.S. stock futures dipped on Friday morning as traders focused on the recent increase in the 10-year Treasury yield. Asia-Pacific markets also experienced losses, extending the decline from the previous day’s sell-off.
The pan-European Stoxx 600 index closed 1.16% lower on Thursday, marking its lowest close since March 15, according to LSEG data. The current market sentiment reflects the cautiousness and uncertainty among investors as they digest the latest comments and developments from the U.S. and global markets.