The European STOXX 600 index closed down one percent, retreating from the highest level in three weeks recorded on Thursday, ending the week with a slight decline.
The Basic Resources and Real Estate sectors were the worst weekly performers in the sector, while the Media and Industrials sectors were the focus of investors’ buying spree.
Federal Reserve officials, including Chairman Jerome Powell, on Thursday expressed uncertainty about their fight against inflation, and added that they would tighten policy further if necessary.
“Markets are somewhat focused on the more hawkish messages from Powell, but Powell stressed that there could be further upside,” said Giles Coughlan, chief market analyst at broker GCFX.
For her part, European Central Bank President Christine Lagarde said that inflation in the euro zone may rise in the coming months, but keeping European Central Bank interest rates at their current level for at least several quarters may lead to inflation returning to 2 percent levels.
The markets considered these statements to be extremely hawkish, as they came after policymakers at the European Central Bank and the Bank of England resisted expectations of lowering interest rates.
On the earnings front, Diageo shares fell 12.2 percent, with the alcoholic drinks manufacturer forecasting that the original growth in operating profits will decline in the first half of its current financial year. Which led to a decrease in the food and beverage sector index by approximately 3.1 percent.
Richemont shares fell by about 5.2 percent after the Swiss luxury group announced weaker than expected profits. The luxury goods sector declined by 2.6 percent.
Investors also weighed the economic data amid growing evidence of an impending recession.
New data showed that Italian industrial production stabilized in September on a monthly basis, reflecting overall weakness in the euro zone’s third-largest economy.
Another survey showed that Norway’s core inflation rate rose more than expected in October, increasing pressure on the central bank to raise interest rates next month.
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