Stocks fall, tracking global momentum

LONDON — European markets fell sharply on Friday, tracking a global pullback for risk assets.

The pan-European Stoxx 600 dropped 1.3% by late morning, with basic resources shedding 2.4% to lead losses as all sectors and major bourses slid into negative territory.

In terms of individual share price movement, wind turbine manufacturer Siemens Gamesa plunged more than 10% after cutting its revenue guidance for 2022, dragging owner Siemens Energy 13% lower. Barely any stocks on the European blue chip index posted significant gains.

The losses come after sharp declines on Wall Street as rising rates continue to exert downward pressure on technology stocks by making future profits less attractive.

The declines were deepened by a plunge in Netflix shares after the company’s fourth-quarter earnings report showed a slowdown in subscriber growth.

U.S. stock futures indicate further losses at Friday’s open, while markets in Asia-Pacific also tumbled overnight.

Back in Europe, Britain’s GfK Consumer Confidence Index sank to -19 in January from -15 in December, its lowest reading since February 2021, as soaring inflation and the prospect of further interest rate hikes dampened the outlook.

U.K. retail sales dropped by 3.7% in December from the previous month, according to the Office for National Statistics, well below the 0.6% fall expected by economists in a Reuters poll.

James Smith, developed markets economist at ING, said while the figures did not make for pleasant viewing, some perspective was required.

“Some of this fall is undoubtedly linked to omicron, given footfall appeared to have been a little lower in the run-up to Christmas,” he said.

“But a lot of this also looks like a pullback after an unusually strong November and Black Friday. Strong October sales also hinted that consumers did more of their Christmas shopping early relative to past years, given news reports of possible shortages, though this is admittedly harder to prove.”

As such, ING does not think the figures will move the needle for the Bank of England, with the Dutch lender anticipating two interest rate hikes this year.

An initial “flash” consumer confidence reading for the euro zone is expected on Friday afternoon. There are no major earnings due in Europe on Friday.

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In corporate news, Rio Tinto shares took a hit overnight after Serbia revoked the Anglo-Australian mining company’s lithium exploration licenses, citing environmental concerns.

Meanwhile, Unilever has ruled out a fourth increase to its bid for GlaxoSmithKline‘s consumer health-care business, effectively abandoning a tie-up that had ruffled feathers among investors.

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