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European stocks find support at end of volatile week
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(Reuters) -European shares rose on Friday, as sentiment stabilised at the end of a volatile week dominated by worries about aggressive monetary policy tightening and slowing global growth.
(Reuters) -European shares rose on Friday, as sentiment stabilised at the end of a volatile week dominated by worries about aggressive monetary policy tightening and slowing global growth.
The pan-European STOXX 600 index rose 1.3%, with banks and technology stocks leading early gains.
Global markets, particularly U.S. stocks, have gyrated wildly this week as investors feared that tightening financial conditions, with the Federal Reserve preparing for a series of interest rate hikes to contain a surge in inflation, will tip the economy into recession. [.N]
Fed Chair Jerome Powell repeated on Thursday his expectation that the Fed will raise interest rates by half a percentage point at each of its next two policy meetings, easing worries about a bigger 75 basis point rate hike that some investors were expecting.
Despite Friday’s gains so far, the STOXX 600 is set to post its fifth consecutive weekly decline.
“The risks are to the downside with huge jump in economic uncertainty and large real disposable income shocks for households,” Deutsche Bank economists said in a note.
“Recession risk is rising. Ukraine war is the main concern in 2022. The main concern in 2023 is combined ECB/Fed tightening.”
Among individual stocks, Deutsche Telekom edged 0.7% higher, after it raised its annual earnings guidance.
Wind turbine maker Vestas dropped 4.4%, after Berenberg downgraded the stock to “hold”.
French care home group Orpea, which faces criminal complaints over how it runs its centres and treats its elderly residents, dropped 4.7% after saying that it would not pay a dividend on 2021 earnings.
Norwegian Air edged up 0.5%, as the airline posted a quarterly loss and said the surge in fuel costs would partly offset the effects of increased summer bookings.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Subhranshu Sahu and Rashmi Aich)
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic goals such as controlling inflation, consumption, growth, and liquidity.
Economic growth is the increase in the production of goods and services in an economy over a period of time, typically measured as the percentage increase in real gross domestic product (GDP).
The stock market is a collection of markets where stocks (shares of ownership in businesses) are issued and traded. It serves as a platform for companies to raise capital and for investors to buy and sell shares.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. Central banks attempt to limit inflation, and avoid deflation, to keep the economy running smoothly.
A recession is a significant decline in economic activity across the economy that lasts for an extended period, typically visible in GDP, income, employment, manufacturing, and retail sales.
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