European Stocks Drop on Fed Rate Outlook
European stocks dropped on Monday as investors worried about the Federal Reserve’s outlook on interest rates. The Stoxx Europe 600 Index fell 0.7%, with the majority of sectors in the red. Adyen NV, a Dutch payments company, was the biggest loser, plunging 8.2%.
Fed Rate Outlook
The Fed’s rate outlook has been a major concern for investors in recent weeks. The central bank has indicated that it will keep rates near zero for the foreseeable future, which has caused some investors to worry that the economy may not be able to handle higher rates.
The Fed’s rate outlook has also weighed on European stocks, as investors worry that higher rates could hurt the region’s fragile economic recovery.
Adyen Plunges
Adyen NV was the biggest loser on Monday, plunging 8.2%. The company, which provides payment processing services to merchants, has been under pressure in recent weeks as investors worry about the impact of higher rates on its business.
Adyen’s shares have fallen more than 20% since the start of the year, and the company is now trading at its lowest level since early 2019.
Other Sectors
Other sectors were also in the red on Monday. Banks were down 1.2%, while technology stocks fell 0.9%. Energy stocks were the biggest losers, dropping 1.4%.
European Economic Recovery
The European economy has been struggling to recover from the pandemic-induced recession. The region’s economy contracted by 7.3% in 2020, and is expected to grow by just 4.2% this year.
The European Central Bank has been trying to support the region’s recovery with its monetary policy, but the central bank has warned that the recovery could be derailed by a resurgence of the virus or a failure to contain the pandemic.
Brexit Negotiations
The UK and the EU are also in the midst of negotiations over the terms of the UK’s departure from the bloc. The two sides have yet to reach an agreement on a number of issues, including fishing rights and the level playing field.
The UK is set to leave the EU at the end of the year, and the two sides have yet to reach an agreement on a trade deal. If no deal is reached, the UK could face tariffs and other trade barriers when it leaves the bloc.
Outlook
European stocks are likely to remain volatile in the coming weeks as investors continue to monitor the Fed’s rate outlook and the progress of Brexit negotiations. The region’s economic recovery is also likely to remain fragile, as the pandemic continues to weigh on the region’s economy.