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European markets close lower after Powell warns of 'some pain' ahead; Stoxx 600 down 1.7%

The Grand Tetons in Grand Teton National Park outside Jackson, Wyoming, in August 2022.
Jim Urquhart | Reuters

LONDON — European markets closed lower on Friday after U.S. Federal Reserve Chairman Jerome Powell warned of "some pain" ahead in the fight against inflation.

European markets


The pan-European Stoxx 600 provisionally ended down 1.7% following the comments at the central bank's Jackson Hole economic symposium. All sectors turned red in afternoon trade, with retail and travel and leisure stocks sliding the most, down 3.5% and 3.4%, respectively.

Powell on Friday reiterated his commitment to halting inflation, warning that he expects the Fed to continue raising interest rates in a way that will cause "some pain" to the U.S. economy.

He added that the bank will "use our tools forcefully" to attack inflation, which is still running near its highest level in more than 40 years.

While some investors were hopeful of comments pointing toward a future dovish pivot, many analysts expected the chairman to adopt a hawkish tone and reiterate the Fed's commitment to dragging inflation back toward the target.

U.S. stocks turned negative following Powell's comments, with the Nasdaq shedding 2.5% in late-morning trade. Meantime, shares in Asia-Pacific ended higher Friday afternoon.

Back in Europe, U.K. energy regulator Ofgem announced its latest increase in the country's energy price cap, offering a bleak insight into the path of the deepening cost-of-living crisis and the U.K. inflation outlook.

Food delivery stocks slide

Food delivery stocks slid in afternoon trade Friday, following Federal Reserve Chairman Jerome Powell's comments at Jackson Hole, Wyoming.

Just Eat fell to the bottom of the Stoxx 600, down 7.8%, by the close of trade. Delivery Hero and Hellofresh also both lost 7.2%.

Powell reiterated Friday that the U.S. central bank will continue raising rates to subdue inflationary pressures.

— Karen Gilchrist

Powell reiterates Fed will continue to raise rates to fight inflation

Fed Chairman Jerome Powell reiterated that the central bank will continue raising rates to subdue inflationary pressures. He also warned, however, there may be "some pain" ahead as these measures take hold.

 "Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy," Powell said in a speech at a Jackson Hole, Wyoming symposium.

—Fred Imbert, Jeff Cox

U.S. stocks open flat

U.S. stocks were little changed in Friday morning trade as investors awaited comments from Federal Reserve Chairman Jerome Powell.

The Dow Jones Industrial Average opened marginally above the flatline, while the S&P 500 and the Nasdaq were slightly lower.

Powell is due to speak at 10 a.m. ET speech at the central bank's annual symposium in Jackson Hole, Wyoming.

— Karen Gilchrist

Stocks on the move: SKF up 5%; Maersk down 4%

Swedish bearing and seal manufacturer SKF saw its shares climb more than 5% by mid-morning after Cevian Capital increased its stake in the company to more than 5%.

At the bottom of the Stoxx 600, Danish shipping giant Maersk fell 4% after dropping plans to sell its container making unit to China's International Marine Containers as U.S. regulator raised competition concerns.

- Elliot Smith

UK energy price cap rockets to £3,549 per year

U.K. energy regular Ofgem on Friday announced that from Oct. 1, its price cap will soar by 80% to £3,549 ($4,189.64) per year from its current level of £1,971, as a result of a continued rise in wholesale gas prices.

With the U.K. already facing a historic cost of living crisis, Ofgem warned that the situation will deteriorate further in 2023, and declined to offer any estimates for further increases in January.

Ofgem CEO Jonathan Brearley told BBC Radio on Friday that the U.K.'s next prime minister, who will be announced on Sept. 5, will need to act urgently and decisively to address the problem.

- Elliot Smith

CNBC Pro: Tech investor Paul Meeks reveals one chip stock he's steering clear of — 'even on the dip'

Forget Nvidia. Fund manager Paul Meeks reveals the chip stocks he would buy
VIDEO2:1602:16
Forget Nvidia. Fund manager Paul Meeks reveals the chip stocks he would buy

A sharp sell-off in chip stocks in this year has offered investors an opportunity to buy the dip. But fund manager Paul Meeks is staying away from one particular stock. He revealed why and named 2 chip stocks he would rather buy.

Pro subscribers can read the story here.

— Zavier Ong

CNBC Pro: Fund manager names 2 stocks that could do well as inflation stays ‘higher for longer’

Fund manager names 2 stocks to navigate 'higher for longer' inflation
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Fund manager names 2 stocks to navigate 'higher for longer' inflation

Inflation concerns are back in force amid a pullback in stocks. Fund manager Jordan Cvetanovski named 2 stocks he's putting his money on to navigate inflation that's "here to stay."

Pro subscribers can read the story here.

— Zavier Ong

Here are the opening calls

Around two hours before market open in Europe, Britain's FTSE 100 was set to add around 20 points to 7,500, Germany's DAX to gain around 46 points to 13,318 and France's CAC 40 was seen around 21 points higher at 6,403.