European Shares Tumble As Inflation Fears Return To Center Stage

European stocks fell sharply on Wednesday as inflation and interest-rate worries returned to haunt investors.

Risk-off sentiment prevailed ahead of speeches by a couple of European Central Bank policy-makers and U.S. Federal Reserve Chair Jerome Powell later in the day.

“With inflation rising sharply, there has been good reason to expedite the normalization of monetary policy,” ECB Governing Council member Olli Rehn said on Tuesday.

“The impacts of Russia’s brutal war are being felt around the world, and people are having to pay higher prices for energy and food,” he said.

Surging U.K. inflation also revived fears about aggressive monetary tightening and slowing growth.

U.K. consumer price inflation rose further in May at the fastest pace in 40 years on rising energy and food prices, deepening the cost of living crisis.

U.K. consumer price inflation rose to 9.1 percent in May, in line with expectations, from 9.0 percent in April, data from the Office for National Statistics revealed.

The pan-European Stoxx 600 tumbled 1.7 percent to 401.62 after closing 0.4 percent higher in the previous session.

The German DAX gave up 2.3 percent, France’s CAC 40 index lost 1.9 percent and the U.K.’s FTSE 100 was down 1.4 percent.

BP Plc tumbled 3.2 percent and Shell slumped 4.2 percent in London, as oil prices plunged more than $6-a-barrel amid a push by U.S. President Joe Biden to bring down soaring fuel costs.

Miners Anglo American, Antofagasta and Glencore lost 3-5 percent.

JD Sports rallied 3.6 percent after the sportswear retailer posted an annual profit that more than doubled.

Denmark-based Carlsberg A/S fell 2.3 percent after its CFO Heine Dalsgaard resigned.

Clariant AG, a Swiss specialty chemicals firm, lost almost 5 percent after saying it intends to slim down the number of business units from five to three.

Biocartis Group NV, a Belgium-based molecular diagnostics company, declined 2.4 percent after it has entered into an agreement with British drug major AstraZeneca for the development and marketing of a companion diagnostic test for Tagrisso (osimertinib), a lung cancer therapy.

Norway’s Mowi gave up 3 percent after a share placement.

Capgemini fell 1.1 percent while Orange advanced 1 percent. The French companies confirmed that Bleu, their future joint venture that will provide trusted cloud (“Cloud de Confiance”2) services to address the needs of specific French organizations, is expected to start supporting clients in preparing for their migration by the end of 2022.

Banking group Crédit Agricole SA declined 1.9 percent after unveiling a new strategic roadmap. The lender said it targets one million extra retail banking customers by 2025 and a net profit of more than 6 billion euros ($6.30 billion.

BASF plunged 5.4 percent. The German chemical group’s CEO said the company’s business will likely face a considerable downturn early in the second half of the year.

Hugo Boss was moving lower despite Frasers Group raising its stake in the German fashion brand.

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