European Shares Slide As Powell Signals Careful Approach To Rate Cuts

European stocks declined on Friday as Federal Reserve Chair Jerome Powell signaled a cautious approach on rate cuts and mixed Chinese data stoked concerns about slowing demand in the country.

Powell said the U.S. central bank does not need to rush to lower interest rates and can approach decisions carefully, given persistent inflationary pressures.

Data showed earlier today that China’s industrial output expanded at a slower-than-anticipated 5.3 percent in October, while retail sales jumped an annual 4.8 percent to surpass expectations boosted by a week-long holiday and the annual Singles’ Day shopping festival.

Property investment fell 10.3 percent year-on-year in January-October and fixed asset investment growth in the first ten months of 2024 came in below expectations, keeping alive calls for Beijing to unveil more stimulus.

Closer home, Destatis reported that Germany’s wholesale prices continued to decline in October, though at a slower pace.

German wholesale prices decreased 0.8 percent year-on-year in October, slower than the 1.1 percent drop in September.

Wholesale prices have been falling since May 2023, and the latest drop was the weakest in three months.

The British pound hovered near a four-month low after data showed Britain’s economy contracted unexpectedly in September and growth slowed to a crawl over the third quarter.

GDP grew 0.1 percent sequentially, following growth of 0.5 percent in the second quarter. That was also weaker than the forecast of 0.2 percent.

In September, GDP edged down 0.1 percent, in contrast to the 0.2 percent expansion in August.

The pan-European STOXX 600 dropped half a percent to 504.77 and was on track for its fourth successive weekly drop.

The German DAX slipped 0.3 percent, France’s CAC 40 eased 0.2 percent and the U.K.’s FTSE 100 was little changed with a negative bias.

Vaccine makers were coming under selling pressure, with GSK and Sanofi falling 2-3 percent, after U.S. President-elect Donald Trump tapped anti-vaccine activist and conspiracy theorist Robert F. Kennedy as his secretary of health.

Danish biotech Bavarian Nordic plunged 16 percent after announcing its interim results for the first nine months of 2024.

Generali Group shares were up 5 percent. The Italian insurer beat estimates with nine-month profits, despite a 930 million euro ($980.22 million) hit from natural disasters.

Dutch insurer Aegon added 2 percent after launching a share buyback worth 150 million euros.

Chipmaker ASML tumbled 3 percent after U.S. firm Applied Materials reported fiscal fourth-quarter earnings that missed analysts’ expectations.

Evotec SE shares jumped 20 percent after Halozyme Therapeutics has put forth a non-binding proposal to acquire the German drug developer Evotec for about 2 billion euros ($2.10 billion).