European stocks close lower on Powell’s comments; ITV down 7.6%

  • European equities closed lower after comments on Tuesday from new Fed Chair Jerome Powell, which hinted at interest rates rising more than three times in 2018.
  • Basic resources fell the furthest, following by the utilities and health care sectors.

European equities closed lower Wednesday afternoon following comments from U.S. Federal Reserve Chairman Jerome Powell committing to a gradual increase in interest rates.

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The pan-European Stoxx 600 closed 0.65 percent lower with all major bourses and most business sectors in negative territory.

Media and technology were the only sectors in positive territory, and only marginally so. They were up 0.05 and 0.07 percent respectively.

Basic resources fell the furthest, tanking 2.26 percent at the market close. British-Mexican mining firm Fresnillo performed the worst, closing 4.2 percent lower. Its earnings report released Tuesday announced that the company had missed its annual profit expectations for 2017 and anticipated higher costs to come.

Utilities and health care were also big movers Wednesday. Utilities closed 1.32 percent lower, while health care was 1.01 percent below the flat line.

Negative sentiment was influenced by Tuesday's remarks from Fed Chair Powell. The recently-appointed chairman said that it was possible the central bank could increase rates more than three times this year. Expectations of a more hawkish Fed are traditionally harmful to stocks as higher rates increase firms' costs.

Earnings; inflation down in the euro zone

Looking across the European benchmark, Dialog Semiconductor closed near the top of the index, up by 6.6 percent after reporting its latest results. On the other hand, Biomerieux fell more than 10 percent after posting results.

Insurance firm Admiral Group's stock had a changeable day. It rose above 5 percent in early trade after announcing a dividend of 58 pence per share and a 43 percent increase in pre-tax profit. However, the stock lost those gains by mid-morning trade and closed 4.6 percent lower.

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Solvay said Wednesday that profit growth should slow down in 2018 though its fourth-quarter numbers came in line with expectations. The stock closed over 3.5 percent in the red.

Bayer saw its fourth-quarter net profit fall due to a tax overhaul in the U.S. The firm didn't add any details on the merger with Monsanto but said that wants to see the deal closed in the second quarter. The stock closed 1.9 percent lower.

Ahold Delhaize's net income grew more than four times in the fourth quarter compared to the same period a year ago. Shares closed over 3 percent to the upside.

ITV said that a tough ad market contributed to a 5 percent drop in earnings. The stock was down 7.6 percent at the close.

U.S. stocks higher

U.S. stocks were trading higher Wednesday as interest rates stabilized, putting the major averages closer to the levels seen before their 10 percent pullback.

The Dow Jones industrial average rose 83 points and jumped as much as 166.12, while the S&P 500 gained 0.4 percent. The Nasdaq composite advanced 0.4 percent as shares of Amazon, Netflix and Apple all rose.