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European stock markets slide at open


Europe’s main stock markets fell in opening deals on Thursday after broad losses in Asia, extending this week’s global sell-off on persistent worries over faster-than-expected US interest rate hikes.

In initial deals, London’s benchmark FTSE 100 index of top blue-chip companies dropped 0.2 percent to 7,219.87 points compared with the closing level on Wednesday.

In the eurozone, Frankfurt’s DAX 30 lost 0.4 percent to 12,386.40 points and the Paris CAC 40 shed 0.3 percent to 5,304.81.

After a couple of weeks of calm, the volatility that kicked off February has returned on worries that the strong US economy and President Donald Trump’s tax cuts will lead the Federal Reserve to tighten borrowing costs more than previously thought.

The latest bout of selling came after new Fed boss Jerome Powell gave an upbeat assessment for the economic outlook as he appeared before lawmakers Tuesday.

“When interest rates look set to rise, stocks tend to fall,” City Index analyst Fiona Cincotta told AFP.

“A higher interest rate environment is not beneficial for most firms. This is because higher interest rates make it costlier for companies to borrow money,” the expert said.

“Increased costs meant lower profits. It is this fear of higher interest rates dampening company profits which is causing equities to sell off,” Cincotta said.

“Added to this, higher interest rate expectations indicate a change is on the horizon, given the dislike for change, this also goes some way to creating a jittery market.”

Powell, who was sworn in earlier this month as the 16th leader of the Federal Reserve, is due to speak again on Capitol Hill later on Thursday.

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