Falls in Europe, stock markets are on track for their worst month since October 2020

European markets are trading lower on the final day of the week, heading for their worst month since October 2020 on prospects of faster monetary policy tightening by the US Federal Reserve and rising of geopolitical tensions in Ukraine.

The central bank signaled it would start raising interest rates in March, while Governor Powell did not rule out rate hikes at every meeting of the year to curb rising prices.

Tech stocks were also under pressure and were on track for their worst monthly loss since October 2008, even as Apple, its US counterpart, reported better-than-expected quarterly revenue overnight in the fiscal first quarter, despite despite a pandemic-fueled supply chain crisis and chip shortages.

It also puts downward pressure on the falls in the Chinese stock market during the Asian session.

The Shanghai index fell 0.97%, while the Shenzhen index fell 0.53% as investors shied away from large investments ahead of the Lunar New Year holiday week.

Both indices fell around 5% for the week, extending year-to-date losses for the tech-heavy Shenzhen Index to 10.3%, as prospects for tighter policy from the US Federal Reserve added to concerns about regulatory headwinds from the Chinese market.

The Euro Stoxx 50 lost 1.15%, the German DAX fell 1.16%, while the French CAC 40 and the Ibex 35 dropped 0.65% and 0.72% respectively.

On a macro level, we have had growth data, the French economy advanced 0.7% qoq in the fourth quarter, slowing sharply from an upwardly revised 3.1% growth in the third quarter, but beating expectations of an expansion 0.5%.

For all of 2021, the economy grew 7%, the biggest gain in 52 years, after an 8% contraction in 2020.

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The Spanish economy expanded by 2% quarter-on-quarter in the last three months of 2021, following growth of 2.6% in the previous period and beating market expectations of 1.4%.

Fixed investment advanced 4.9%, the highest in more than a year, led by tangible fixed assets such as construction activity (2.3% vs. -0.4%) and machinery, capital goods, weapons and cultivated biological resources (6.1% vs. 3.7%), as well as intellectual property products (10% vs. 0.9%).

Furthermore, net external demand contributed positively to GDP, as exports increased more than imports. On the other hand, private consumption contracted 1.2% (vs. 1% percent in Q3) and public spending decreased 0.4% (vs. 0.5% in Q3), due to persistent effects of COVID-19 and the increase in consumer prices.

On an annual basis, the Spanish economy expanded by 5.2% in the fourth quarter, also above forecasts of 4.5%.

On the corporate front, we saw results in France from luxury goods maker LVMH, which reported fourth-quarter sales growth and forecasts demand for its fashion, handbag and jewelry products to continue to rise in 2022. In addition, Swedish fashion retailer H&M has posted a larger-than-expected profit rise for the September-November period.

In the banking sector, Italy's UniCredit reported better-than-expected full-year revenue and underlying profit, but CaixaBank's pro forma profit nonetheless fell 52.2% in the fourth quarter on fewer one-offs.

As for geopolitical tensions, Reuters reports, Russia said on Thursday that it was clear the United States was unwilling to address its main security concerns in their standoff over Ukraine, but both sides kept the door open for further dialogue.

In the commodity market, oil prices rose for their sixth weekly gain amid concerns about tight supplies as major producers continue their policy of limited output increases amid the growing demand for fuel.