European stock markets lower on hawkish Powell

The DAX index in Germany traded 0.4 per cent down, the CAC 40 in France traded 0.6 per cent down, while the FTSE 100 in the U.K. shed 0.8 per cent

European stock markets traded lower Friday, as investors digested hawkish comments from Fed chief Jerome Powell and more corporate earnings.

At 08:40 GMT, the DAX index in Germany traded 0.4 per cent down, the CAC 40 in France traded 0.6 per cent down, while the FTSE 100 in the U.K. shed 0.8 per cent.

Sentiment has been hit after Fed Chair Jerome Powell cautioned on Thursday that rate hikes were still under consideration as the central bank seeks to bring inflation completely under control.

(The Fed) is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2 per cent over time, Powell added.

We are not confident that we have achieved such a stance. If it becomes appropriate to tighten policy further, we will not hesitate to do so, he added.

Powell's comments follow ECB and BoE policymakers also pushing back against expectations around rate cuts.

Global equities had surged over the last week, bolstered by growing confidence that a peak in U.S. interest rates was in sight, after the Fed left rates unchanged.

Attention now turns to European Central Bank President Christine Lagarde, who is scheduled to speak later in the session. Investors will listen to her for clues on future monetary policy.

Lagarde has a tricky path to tread, because the latest eurozone business activity data, released at the beginning of the week, indicated there is a growing chance of recession in the region, even while inflation remains above the ECB’s medium-term target.

Data released earlier Friday showed that growth stagnated in the U.K. in Q3, although GDP increased 0.2 per cent on the month in September, marginally better than the flat figure expected.