By Peter Nurse
Investing.com - European stock markets sold off Wednesday, with the week’s rally fizzling out after soaring U.K. inflation added to persistent concerns about aggressive monetary policy tightening and slowing growth.
The main European indices posted minor gains on Tuesday, adding to Monday’s improvement in the wake of last week’s hefty losses as a number of global central banks tightened monetary policies to tame red hot inflation.
However, global sentiment has turned negative, not helped by U.K. inflation hitting a fresh 40-year high in May, remaining elevated despite the Bank of England raising interest rates for the fifth time last week.
Elsewhere, there are a couple of European Central Bank policy-makers scheduled to speak later in the session, but the day’s main focus will be on the start of U.S. Federal Reserve chair Jerome Powell’s two-day testimony to Congress later Wednesday.
Investors will be looking for further clues about whether another 75 basis pointis on the cards at the Fed's July meeting, amid uncertainty whether aggressive monetary tightening to combat the raised levels of inflation will force the U.S. economy, the world’s main growth driver, into recession.
In corporate news, JD Sports (LON: JD ) stock fell 1.2% despite the sportswear retailer reporting a more than doubled of its annual profit. It has been a subject of several investigations by Britain's antitrust watchdog, and is splitting the position of chair and chief executive officer.
Hugo Boss (ETR: BOSSn ) stock fell 0.7% despite Frasers (LON: FRAS ) stating it had increased its stake in the German fashion brand, owning 4.9% of the stock directly and holding options over another 26%.
Oil prices slumped Wednesday as traders fretted about an economic slowdown in the U.S., the largest consumer of crude in the world, ahead of the appearance of Fed Chair Jerome Powell before Congress later Wednesday.
Also weighing on the market is a push by the Biden administration to bring down soaring fuel costs, an issue that is rapidly becoming a political problem ahead of the midterm elections.
President Joe Biden is expected on Wednesday to call for temporarily suspending the 18.4-cents a gallon federal tax on gasoline, Reuters reported, while seven major oil companies are set to meet with the president on Thursday.
Weekly U.S. petroleum inventory data from the American Petroleum Institute for the week ending June 17 are due later Wednesday, a day later than usual after Monday’s U.S. holiday.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.