On Friday, European stocks fell due to the concerns surrounding the Omicron variant of the coronavirus, whereas the US inflation numbers coming in mostly in accordance with expectations did little to assuage the uncertainty of the country’s monetary policy. There was a fall of 0.3% in the pan-European STOXX 600 index, which was a decline for the third session in a row. This was primarily because of worries that the measures implemented for curbing the spread of the Omicron variant could have an impact on economic recovery. However, the beginning of the week had seen the index post a strong two-day gain, which put it on course for its best weekly gain by 2.8% since March.
The data showed on Friday that there was a 6.8% increase in US consumer prices, which is the biggest annual increase seen after June 1982. There had been a 6.2% increase in same back in October. Market analysts said that the week was ending on a subdued note, as stocks appeared to be taking a breather after some strong gains in the first half of the week. They added that even though the US CPI had been similar to expectations, prices were still rising. This meant that even though the data hadn’t increased pressure on the Fed to increase interest rates, it didn’t lessen the pressure either.
In contrast, it was regarded as a dovish move when news hit that the European Central Bank (ECB) was considering increasing its bond purchase program temporarily at a policy meeting scheduled for the coming week. The top declines in Europe on Friday were retail and technology. Equity strategists said that they believe equities will have a low path for the next year. If the Fed becomes hawkish, real bond yields are expected to rise from their lows and a quicker-than-expected rate hike by the Fed would be priced in by the market.
Daimler AG led the auto stocks up with a 2.9% increase after Daimler Truck, its spin-off, increased on the Frankfurt Stock Exchange in its market debut. The sector saw gains, even as data indicated that there was a 9.1% drop in China’s auto sales, which marked their seventh monthly decline in a row. This is because production has been disrupted due to a global shortage of semiconductors. There was a 7.2% jump in tobacco group called Swedish Match, after a report by the Wall Street Journal of US Democrats proposing to tax e-cigarettes the same way as regular ones.
There was a 3.2% and 2.4% fall in the shares of popular food delivery companies, Just Eat Takeaway and Deliveroo, respectively. This only increased their losses from the past week because of worries that profits would suffer due to a ruling of the European Commission on gig economy drivers. There was a 10.2% jump in Polish fashion retailer LPP’s stocks, as they reached a fresh record high. The stock was also to extend their rally from Thursday, after the company had announced strong results for the third quarter of this year.