Global markets fall on rate cut comment from Fed chairman

European markets fell on Friday following comments from US Federal Reserve chairman Jerome Powell on Thursday saying there was no hurry in lowering US interest rates.
The Irish market followed it peers, notching a 0.75 per cent decline on the day. Kerry Group dropped 4.57 per cent to €86.70 on Friday. It was part of a larger sectoral move that saw Glanbia fall by 1.82 per cent to €14.55. From a banking perspective, AIB gained 1.40 per cent to €5.43 a share. Bank of Ireland was up 1.58 per cent to €8.75.
Kingspan lost 1.93 per cent, finishing the day at €73.50. Home builder Cairn Homes was down by 0.68 per cent to €2.17 and Glenveagh Properties fell 0.5 per cent to €1.59 a share. Ryaniar fell by 0.53 per cent to €18.79 a share.
The main UK stock indexes slipped on Friday also, with losses in AstraZeneca and GSK weighing on the blue-chip FTSE 100, while data showed Britain’s economy contracted unexpectedly in September.
Shares of drugmakers AstraZeneca dropped 3.1 per cent and GSK dipped 3.9 per cent, tracking losses in US and European vaccine makers after US president-elect Donald Trump said he had selected Robert F Kennedy Jr, who has previously spread misinformation on vaccines, to lead the Department of Health and Human Services.
The FTSE 100 closed down 0.1 per cent and clocked its fourth consecutive week of declines.
Britain’s economy contracted unexpectedly in September and growth slowed to a crawl over the third quarter, data showed, an early setback for finance minister Rachel Reeves’ ambitions to kick-start a sustained pickup.
GDP slipped by 0.1 per cent in monthly terms during September, while economists had forecast an expansion of 0.2 per cent.
Euro zone borrowing costs steadied on Friday, German 10-year bond yields, the benchmark for the euro zone , stood at 2.346 per cent, on track to end a second straight week little changed.
The euro zone debt market has been struggling for direction since Donald Trump’s election victory in the United States earlier this month.
European yields initially tracked US rates higher, but the prospect of damage to an already fragile euro zone economy from Trump’s proposed trade tariffs made the case for more rate cuts from the European Central Bank, bringing yields lower.
The European Central Bank’s 0.25 per cent rate cut last month was seen as insurance against unexpectedly low inflation, minutes of their October 16-17 meeting showed on Thursday.
Money markets see a near-20 per cent chance that the European Central Bank will opt for a larger 50-bps rate cut next month, up from about 10 per cent just over a week ago. Traders are confident of at least a quarter-point reduction.
The Nasdaq and the S&P 500 were set for their worst session in over two weeks on Friday, after comments from Federal Reserve Chair Jerome Powell pointed to a slower pace of interest-rate cuts.
Powell on Thursday pointed to ongoing economic growth, a solid job market, and inflation above the Fed’s 2 per cent target as reasons the central bank can afford to be careful with the pace and scope of future rate cuts.
Traders increased bets the Fed will keep rates on hold at its December meeting, pricing in a 38 per cent chance, compared with 14 per cent a month ago, according to the CME FedWatch tool. They also dialled back expectations for easing in 2025.
That view was reinforced by economic data on Friday showing US retail sales increased slightly more than expected in October, pointing to further economic strength, while import prices rebounded.
Rate-sensitive megacaps fell as Treasury yields rose, with Nvidia and Amazon.com down more than 3 per cent each, while the information technology index dropped 2.3 per cent.
All three major U.S. stock indexes were headed for weekly losses – the Dow 1.2 per cent, the Nasdaq 2.9 per cent and the S&P 500 2 per cent – as market focus shifted from the presidential election to the state of the economy and potential inflation risks under a new administration. Additional reporting: agencies