European stocks fell Friday, with losses driven by autos, while investors continued to weigh up policy decisions by central banks this week and a surprisingly strong set of U.S. jobs numbers.
The Stoxx Europe 600 index SXXP, -1.22% fell 1.3% to 462.26, and was poised for a 0.7% drop for the week. Stocks lost 1.8% on Thursday, snapping a three-day winning streak and marking the biggest decline since Jan. 24. The German DAX DAX, -1.65% fell 1.7%, the French CAC 40 PX1, -0.76% fell 0.8% and the FTSE 100 index UKX, -0.11% was down 0.2%.
The euro EURUSD, -0.04% rose 0.1%, while the pound GBPUSD, -0.51% slid 0.5% against the dollar. Bond yields continued to climb, with that of the 10-year German bund TMBMKDE-10Y, 0.196% rising to 0.19% from 0.11%, and the 10-year gilt yield TMBMKGB-10Y, 1.391% rose to 1.39% from 1.34%.
At Thursday’s European Central Bank meeting, President Christine Lagarde would not rule out the possibility of a 2022 interest rate hike, as she acknowledged that inflation pressures in the eurozone are now “tilted to the upside.” She indicated the central bank would assess inflation pressures in detail and any response needed at the next meeting in March.
“Highly indebted eurozone governments look better placed to cope with tighter monetary policy than they were when the ECB last raised interest rates, in 2011,” said Jack Allen-Reynolds, senior Europe economist at Capital Economics, in a note. “That said, there is still plenty of scope for even-higher-than-expected inflation or a policy error to cause renewed turmoil in the bond markets.”
The Bank of England, meanwhile, made the first set of back-to-back interest rate hikes since 2004, hiking rates 0.25% due to a tight labor market and rising inflationary pressures. The central bank last hiked in December.
Fresh data showed German manufacturing orders increased 2.8% in December aid continuing supply-chain disruptions, a number that beat expectations for a rise of just 0.3%, forecast by economists polled by The Wall Street Journal.
U.S. stocks SPX, +0.20% DJIA, -0.05% COMP, +0.56% opened mixed as strong jobs data increased expectations for a Federal Reserve hike in March. Amazon AMZN, +11.09% climbed after blowout results from it and a few other names, including Snapchat parent Snap SNAP, +46.14% and Pinterest PINS, +7.96%.
The biggest gaining stock in Europe was Assa Abloy ASSA.B, +5.97% with shares of the Swedish lock maker posted a forecast-beating rise in fourth-quarter net profit and lifted its dividend.
Sweden’s Assa Abloy AB on Friday posted a forecast-beating rise in fourth-quarter net profit and raised its dividend. The lock maker said net profit for the period rose to 3.04 billion Swedish kronor ($334.2 million) from SEK1.47 billion for the year-earlier period.
“The company does not provide guidance, but we think the strength of this performance in the face of continued supply chain and other cost pressure should be taken well,” said a team of analysts at Berenberg, led by Joel Spungin, in a note to clients.
Oxford Nanopore Technologies ONT, +1.91% was another big gainer, up nearly 5%. In a positive note on the maker of nanopore sequencing products, analysts at Berenberg. They noted that shares of the company have dropped this year due to worries about new competition.
“However, while we do believe that Illumina’s ILMN, +0.06% coming launch of a ‘synthetic’ long-read technology should be closely followed, ONT’s strong reception at the recent UK-based Festival of Genomics 2022 conference and our own discussions with experts leave us comfortable about the significant competitive advantages that ONT’s technology offers,” said analysts Odysseas Manesiotis and Tom Jones, in a note to clients.
Shares of AddLife ALIF.B, -21.37% tumbled 18% after the Swedish life sciences company said CEO Kristina Willgård plans to step down this year.