European Stocks Close Lower As Powell's Comments Hurt Sentiment

(RTTNews) - European stocks fell on Tuesday after U.S. Federal Reserve Chair Jerome Powell warned in his congressional testimony that the central bank will likely raise interest rates higher than previously thought to fight inflation.

Citing stubbornly elevated inflation and stronger than expected economic data, Powell said during his semiannual monetary policy testimony before the Senate Banking Committee that "ultimate level of interest rates is likely to be higher than previously anticipated."

Powell also said the Fed would be prepared to reaccelerate the pace of rate hikes if the totality of incoming data were to indicate that faster tightening is warranted.

Additionally, the Fed chief reiterated the central bank will likely need to maintain a restrictive stance of monetary policy for "some time" in order to restore price stability.

The European Central Bank's Holzmann had already hinted at more rate hikes by the ECB, and Powell's remarks today added to concerns about rate hikes, rendering the mood in the market a bit bearish.

The pan European Stoxx 600 fell 0.77%. The U.K.'s FTSE 100 edged down 0.13%, Germany's DAX declined 0.6% and France's CAC 40 dropped 0.46%, while Switzerland's SMI drifted down 0.75%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Finland, Greece, Iceland, Netherlands, Norway, Poland, Portugal, Spain, Sweden and Turkiye closed weak.

Ireland closed higher, while Denmark and Russia ended flat.

In the UK market, Fresnillo tumbled nearly 7%. Ocado Group, Glencore, Endeavour Mining, Antofagasta, Anglo American Plc, Vodafone Group, Weir Group, British Land, Land Securities Group and Barclays lost 2 to 5%.

HelloFresh shed about 2.6% after it forecast 2023 core profit below estimates.

Melrose Industries rallied nearly 4%. Ashtead Group gained about 2.3% after the equipment rental firm forecast annual results ahead of its own estimates.

Beazley, Flutter Entertainment, Rentokil Initial, HSBC Holdings and Astrazeneca gained 1 to 2.3%.

In Paris, STMicroElectronics, ArcelorMittal, Michelin, Eurofins Scientific, BNP Paribas, Veolia, Capgemini, Saint Gobain, Alstom SA, Credit Agricole and Essilor lost 1 to 2%.

Danone gained more than 1%. Thales and Sanofi both advanced nearly 1%.

In the German market, Vonovia ended more than 5% down. Fresenius Medical Care drifted down 3.7%, while Puma, Zalando and Henkel lost 2.4 to 3%.

Siemens Energy, Deutsche Bank, Fresenius, Deutsche Post and Commerzbank also ended notably lower.

Covestro and Porsche both gained about 1.5%. Daimler gained nearly 1%.

In European economic releases, official data showed German factory orders grew 1% in January from December, confounding expectations for a decline of 0.9%. Nonetheless, the pace of growth eased from revised 3.4% in December.

Elsewhere, a survey showed British houses prices unexpectedly jumped in February amid improvements in consumer confidence and the mortgage market.

Meanwhile, UK retail sales grew at a faster pace in February boosted by the Valentine's Day celebrations despite the cost of living crisis, data published by the British Retail Consortium and accountancy firm KPMG showed. Separate data from Barclays showed that Britons cut back on their card spend on non-essential goods in February.

Like-for-like sales increased 4.9% year-over-year in February, following a 3.9% gain in January. That was almost in line with the expected rise of 4.8%.

Data showed that overall retail sales grew 5.2% versus the 4.2% growth seen at the start of the year.