Macro developments in the US were in the spotlight this week, with investors hopeful that the resumption of data releases would signal a weaker economy and give the Federal Reserve reason to cut borrowing costs in December.However, these expectations were tempered after a growing number of Fed policymakers expressed caution about further easing.
In addition, technology stocks came under renewed selling pressure.
“If US markets are indeed in bubble territory and the fact that the Fed won’t ease will be bad for equities and will certainly have a spillover effect into European markets. The tech sector in Europe is very small, but it could have a ripple effect,” said Anthi Tsouvali, multi-asset strategist at UBS Global Wealth Management. “It’s often about sentiment. So if sentiment drops, it unfortunately has consequences for many markets.” Expectations of a rate cut combined with the end of the longest US government shutdown ever had sent the STOXX index soaring to record highs several times this week.
European technology shares fell 1.4%. Earlier in the session, it hit a seven-week low.
Bucking the trend of the day, luxury group Richemont gained 5.9% and lifted the wider luxury sector after reporting quarterly sales well above expectations.
Siemens Energy rose 9.4% after the German company announced plans to pay its first dividend in four years and raised its medium-term outlook.
Meanwhile, Britain’s FTSE 100 lost 1.1%, pressured by a spike in government bond yields after a report said Chancellor of the Exchequer Rachel Reeves had scrapped plans to raise income tax rates in the upcoming budget, raising questions about plans to balance public finances.
“There are things they (the government) can get around, you know, tinkering around the edges on capital gains, property taxes and things like that. But ultimately none of these things are big enough to be decisive,” said Michael Field, chief equity strategist at Morningstar.
Meanwhile, data showed the eurozone economy continued to grow at a modest but respectable pace in the third quarter, while the trade surplus soared in September thanks to healthy exports to the US.
Nibe Industrier, among others, fell 12.9% after reporting third-quarter results, while Danish vaccine maker Bavarian Nordic lost 5.7% after downsizing its 2025 revenue outlook and chairman Luc Debruyne said he would resign.
IT supplier Bechtle rose 14.9% after posting ‘strong’ third-quarter results.
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