• European equity indexes saw slim losses on Friday to wrap up another down week.
• Davos wrapped up with little rate clues from policymakers.
• Rate tantrum is underway as investors pull back from overextended rate cut hopes.

European equity indexes declined on Friday as investors walked away from the World Economic Forum (WEF) in Davos, Switzerland with little upbeat headlines from the European Central Bank (ECB). ECB policymakers worked overtime this week talking down market expectations of impending rate cuts from the ECB. With inflation continuing to run hotter for longer in the European economy, the ECB is hamstrung on rate cuts for the time being.

ECB President Christine Lagarde put significant effort into avoiding discussing monetary policy durign her scheduled appearances during the Davos economic summit, but noted during a sideline interview with Bloomberg that overextended market expectations of rate cuts from the ECB may be hindering rather than helping on progress fighting inflation.

ECB Lagarde: Aggressive rate cut bets don't help ECB

With investors begrudgingly forced to push back their bets of ECB rate cuts after a lack of supporting statements from Davos, European equities pulled back on Friday. Most indexes saw their worst declines in several months this week, and bullish momentum continues to get hung up on misaligned market expectations.

The German DAX closed mostly flat on Friday, down a scant 0.07% and declining 12 points to close at €16,555.13. France’s CAC 40 declined nearly 40 points to close down 0.4% at €7,371.64. The pan-European STOXX600 closed at €469.24, down 0.26% and shedding 1.21 points.

London’s FTSE major equity index saw a scant gain on Friday, closing up 0.04% at £7,461.93, up 2.84 points but still tipping into a six-week low near £7,400.00