European stocks were down this Tuesday as hawkish comments from Jerome Powell, the Chairman of the Federal Reserve, and concerns over the spread of the omicron variant had a negative effect on investor sentiments.
Stoxx 600, the pan-European stock index was down by 0.9%, leisure and travel were the most affected as they shed 2.8%, leading with the most losses. Major bourses reported negative customer sentiments for European stocks.
Losses accelerated further along, as the federal chief indicated that the bank could tighten monetary policy.
Rare Pessimistic Sentiment By Powell Adds To The Woes For European Stocks
Powell said that the central bank would discuss speeding up the bond-buying taper at a meeting in December. This causes Major averages of European stocks to drop to their session lows.
Appearing before the Senate Committee, the Fed chief said that reducing the speed of purchase of monthly bonds would move faster than the $15B monthly schedules that were announced earlier.
Powell said that the economy is quite strong and inflationary pressures remain high. He said it was therefore appropriate considering wrapping up the taper of asset purchase, maybe even sooner. He said that it would come up for discussion in the next meeting.
Powell’s statement indicates that the Federal bank willow remains focused on combating inflation and the negative impact it has created, and less on any potential disruption in economic activity caused by the new variant of the COVID-19 virus.
Investors reassessed risks linked with the latest variant of the virus. European stock prices were expected to remain low before positive news emerged on this front.
Stephane Bancel, Moderna CEO, said that he believes that existing vaccines are not as effective against the omicron variant and it could be months before the development of a new vaccine to combat the variant.
He said that it would take a couple of weeks at least to study how mutated variants have affected the efficiency of the current vaccines.