Hawkish Fed remarks dent global sentiment

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LONDON — European stocks pulled back on Friday, following global momentum as a fresh round of hawkish comments from Federal Reserve officials resurfaced expectations for imminent policy tightening.

The pan-European Stoxx 600 fell 0.8% in early trade, with utilities and retail stocks shedding 1.3% to lead losses as most sectors and major bourses slid into the red.

Several Federal Reserve policymakers on Thursday signaled that they could be prepared to begin raising U.S. interest rates in March, with inflation now running at 7%. The rate rose at its fastest 12-month pace in nearly 40 years in December.

Expectations for higher rates — which make future cash flows look less attractive — have led to a choppy start to 2022 for global markets.

It’s a big day for Wall Street earnings on Friday, with JPMorgan, Citigroup, BlackRock and Wells Fargo all reporting fourth-quarter results.

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Investors also have an eye on the unfolding geopolitical situation surrounding Ukraine, after Russia poured cold water on talks with NATO members. The breakdown of negotiations prompted U.S. diplomatic official Michael Carpenter to say that “the drumbeat of war is sounding loud and the rhetoric has gotten rather shrill.”

In corporate news, German software group SAP on Thursday reported a 28% jump in fourth-quarter revenue for its cloud computing business, while French state-owned utility EDF has been ordered by the government to sell more of its cheap nuclear power to smaller rivals in order to curb electricity price rises.

On the data front, Germany releases its preliminary full-year GDP growth figures on Friday morning, while French and Spanish consumer price inflation figures for December are also due.

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