LONDON: European stocks took a battering and US tech stocks remained under pressure over interest rate hike worries on Friday, while oil prices dipped and bitcoin slid.
London finished the day down 1.2 percent, Paris fell 1.8 percent and Frankfurt slumped 1.9 percent.
“The pessimism peaked today as European equities buckled under the pressure that has been impacting US shares for the last few sessions,” said market analyst David Madden at Equiti Capital.
Meanwhile, pressure remained on US tech shares, with the Nasdaq Composite down 0.3 percent in late morning trading on Wall Street, after having fallen by 1.1 percent on Thursday.
Friday’s drop was in no small part due to Netflix. Its shares tumbled 21.5 percent at the opening bell after the US entertainment streaming giant reported cooling 2021 subscriber growth in after-hours results, having boomed during Covid lockdowns on surging demand from home-bound consumers.
“The mood in the markets has been progressively getting worse recently as traders are preparing themselves for the prospect of the Federal Reserve hiking interest rates three or four times this year, there is speculation the first rise will be in March,” added Madden.
US tech firms are considered more susceptible to higher borrowing costs than many other companies, and thus their shares have come under pressure.
While the Nasdaq remained in the red, both the Dow and S&P 500 moved into positive territory during morning trading.
Asia markets ended the day mostly down.
Angst about the Fed’s determination to fight surging inflation by removing its ultra-loose monetary policy is dealing a severe blow to the rally in global markets that has run virtually uninterrupted for nearly two years, leaving most markets in the red at the start of 2022.
Officials have started reducing the massive bond-buying put in place at the start of the coronavirus pandemic and it is widely expected they will start lifting borrowing costs from March, though by how much is a matter of speculation.
The Fed has also said it will begin offloading the bonds it already has on its books, which have been key in helping keep rates low, though it is not clear how quickly it will do that.
Markets are now awaiting the Fed board’s meeting next week, hoping it will provide a clear idea about its timetable for policy normalisation.
The slump in European equities may also be due to mounting concern over Russia’s military build-up along the border with Ukraine and the possibility it may invade the country again.
“Sentiment hasn’t been helped by rising concern that the situation on the Ukraine, Russia border may be deteriorating further after the US announced that it was considering evacuating diplomat family members from Ukraine,” said CMC Markets analyst Michael Hewson.
In other markets, oil prices retreated from recent seven-year highs on news of rising US crude inventories, which indicates weaker demand in the world’s top consumer.
Bitcoin fell below $38,000, sitting far below last November’s record of almost $69,000.