European Stocks Drop on Oil, Fed Rate-Cut Concerns – Europe Market Wrap

European equities fell the most in almost two months, reflecting a broader market decline, as oil prices remained at five-month highs and investors awaited a critical reading on the US labour market.

The Stoxx 600 fell more than 1%, after the previous session’s steep decline on Wall Street and losses in Asia early on Friday. US and Eurozone bond rates edged higher as worries of an escalation in the Middle Eastern war maintained Brent crude prices above $91 per barrel, fueling inflation concerns.

However, US futures indicated a minor bounce, with S&P 500 contracts up 0.3%. The index is poised for its worst weekly fall since mid-February.

Oil’s 18% increase this year, along with advances in other key commodities such as copper and palm oil, has heightened the potential of higher-for-longer inflation. Minneapolis Federal Reserve President Neel Kashkari said on Thursday that if inflation progresses slowly, rate cuts may not be required this year.