Europe: Shares fall as US rate cut expectations wane; UK fiscal worries resurface

EUROPEAN shares fell on Friday (Nov 14), as hawkish commentary from US policymakers dampened expectations of an imminent interest rate cut, even as the benchmark Stoxx 600 index registered its strongest weekly performance since late September.

The pan-European Stoxx 600 ended down 1 per cent to 574.81 points, with banks down 2.4 per cent.

Macro developments in the US have been in the spotlight this week and investors were hopeful that the resumption of data releases would point to a weaker economy and give the Federal Reserve reason to lower borrowing costs in December.

However, those expectations were pared after a growing number of Fed policymakers signalled caution on further easing.

Additionally, technology stocks came under renewed selling pressure.

“If indeed (US markets are) in bubble territory and the fact that the Fed won’t ease, it will be bad for equities and would definitely have a spillover effect into European markets. The tech sector within Europe is very small, but it could have a ripple effect,” said Anthi Tsouvali, multi asset strategist at UBS Global Wealth Management.

“A lot of times, it’s about sentiment. So when sentiment goes down, unfortunately, it impacts a lot of markets.”

Expectations of a rate cut coupled with the end of the longest-ever US government shutdown had lifted the Stoxx index to hit record highs numerous times this week.

European tech stocks fell 1.4 per cent. It had hit a seven-week low earlier in the session.

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Bucking the day’s trend, luxury group Richemont gained 5.9 per cent and lifted the broader luxury sector after reporting quarterly sales well ahead of forecasts.

Siemens Energy jumped 9.4 per cent after the German company announced plans to pay its first dividend in four years and raised its mid-term outlook.

Meanwhile, the UK’s FTSE 100 lost 1.1 per cent, pressured by a spike in gilt yields after a report said Finance Minister Rachel Reeves scrapped plans to raise income tax rates in the upcoming budget, raising questions on plans for balancing public finances.

“There are things they (the government) can do around, you know, tinkering around the edges in terms of capital gains and property taxes and things like this. But ultimately none of those things are big enough to move the needle,” said Michael Field, chief equity strategist at Morningstar.

Meanwhile, data showed the eurozone economy continued to expand at a modest but respectable pace in the third quarter while the trade surplus surged in September on healthy exports to the US.

Among other moves, Nibe Industrier declined 12.9 per cent after reporting third-quarter results, while Danish vaccine maker Bavarian Nordic lost 5.7 per cent after it narrowed its 2025 revenue outlook and its chair Luc Debruyne said he would step down.

IT provider Bechtle jumped 14.9 per cent after it delivered “strong” Q3 results.