European stocks post biggest daily drop in 3 weeks

Follow-up - INA

European stocks suffered their biggest drop in three weeks after a report showed stronger-than-expected U.S. jobs growth, fueling fresh concerns about inflation and boosting expectations that the Federal Reserve will adopt a cautious stance on cutting interest rates.

The European Stoxx 600 index fell 0.8%, its biggest decline since December 20.
European government bond yields rose, with the yield on German 10-year bonds reaching its highest point since July 2024, according to Reuters.

The rise in yields weakened investor sentiment, affecting sectors such as utilities, which fell 2.3%, while the real estate sector lost 1.1%.

U.S. job growth unexpectedly accelerated in December while the unemployment rate fell to 4.1 percent, providing signs of strength in the U.S. labor market at the end of last year and leaving Federal Reserve policymakers wondering about the need for further interest rate cuts. The CME Group’s FedWatch tool showed markets now expect the Fed to cut interest rates in June before leaving them unchanged for the rest of the year.