Fed aggressive tapering ‘scares’ the European markets – Stoxx 600 loses 1.25%

European stock markets recorded heavy losses in Thursday’s meeting, in the wake of the publication of the Federal Reserve minutes that showed that the Federal Reserve is ready to proceed with an aggressive tightening of its monetary policy.

Fears of more aggressive tapering by the US Federal Reserve pushed the European stock markets to the “red”, with the pan-European index Stoxx 600 to fall by 1.25% to 488.16 points.

The tech industry plunged 2.4% amid heightened concerns about upcoming US interest rate hikes. The future gains of technology stocks are considered less attractive to investors when interest rates are higher, as rising debt costs can hinder their growth. German software company Nemetschek was at the bottom of the Stoxx 600 with a 7% drop.

The banking sector, which will benefit from the normalization of interest rates, was the biggest gainer in Europe with a rise of 0.9%. Caixabank and Standard Chartered strengthened by 3.9% and 3.7% respectively

In the individual dashboard, the German DAX fell by 1.35% to 16,052.03 points, the French CAC 40 lost 1.72% to 7,249.66 points and the British FTSE 100 slipped 0.88% to 7,450.37 points.

On the periphery, the Italian FTSE MIB recorded a fall of 1.8% to 27,665.69 points, while the Spanish IBEX 35 recorded marginal losses at 8,789.90 points.

In macro of the day, annual inflation slowed in december in germany, for the first time in six months, but still well above the European Central Bank’s inflation target of close to 2% for the eurozone as a whole.

In addition, The UK services sector was hit hard last month, with the PMI marking the biggest drop since the country was last locked, as the Omicron variant has hit the hospitality and travel sectors.

In particular, the IHS Markit services PMI fell to 53.6 points in December, a 10-month low from 58.5 points in November, according to the final measure, which was slightly stronger than the preliminary one (at 53 , 2 units)