By Ankika Biswas
(Reuters) -European shares dropped on Friday in a broader market decline, poised for their first weekly loss in eight, with investors awaiting euro-zone inflation prints and U.S. payrolls data that could further shape monetary policy expectations.
The pan-European STOXX 600 lost 0.8% by 0935 GMT, eyeing a 1% weekly decline, in a somewhat rocky start to 2024, after eight consecutive weekly gains on ramped-up bets of easing monetary policy.
Technology and retail were the top sectoral losers for the week, with the latter also leading declines for the day.
Headlining stocks for the day included French spirits companies Remy Cointreau and Pernod Ricard, down 10.1% and 5.5% respectively, after China announced the launch of an anti-dumping investigation on brandy imported from the European Union.
This steered a 1% drop in France’s benchmark CAC-40 index.
The food and beverages index shed 1.1%, with Italy’s Campari and UK’s Diageo losing more than 2% each.
On the data front, Euro-zone consumer and producer inflation reports and U.S. non-farm payrolls data, due later in the day, will be key for investors in assessing when the European Central Bank and the Federal Reserve can start cutting rates this year.
Bets of a pause and a cut in ECB rates in March were almost evenly split- fresh evidence of investors scaling back their expectations of rate cuts as soon as the first quarter of 2024. Policy decisions from both the ECB and Fed are due by month-end.
Fresh data signalled a higher-than-expected fall in German November retail sales, a day after other reports indicated a rise in German and French inflation, strengthening the case for the ECB to keep rates higher for longer.
“Yes, inflation is rising in most of the states, but not to a degree that would take the building consensus towards receding inflation by strong surprise,” said Andreas Bruckner, European equity strategist at Bank of America, who believes that market narrative of rate cuts this year remains somewhat resilient.
Among other decliners, Endeavour Mining lost 12.4% after removing CEO Sebastien de Montessus with immediate effect.
Signify shed 1.6% after Barclays initiated coverage of the world’s largest light-maker’s stock with an “Underweight” rating.
On the flip side, Syensqo gained 3% after JP Morgan initiated coverage of the chemicals-focussed company’s stock with “Overweight” rating.
German biotech firm Evotec bounced back 2.3% after Thursday’s 18% slump on the “surprising” departure of its long-term CEO.
Netherlands-based Redcare Pharmacy rose 5.2% after Berenberg upgraded the stock to “Buy” from “Hold”.
(Reporting by Ankika Biswas in Bengaluru; Editing by Rashmi Aich and Sohini Goswami)
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