© Reuters.
By Peter Nurse
Investing.com – European stock markets weakened Wednesday, continuing the global selloff after the hotter-than-expected U.S. inflation data fueled speculation that the Federal Reserve will continue its aggressive monetary tightening.
By 03:45 ET (07:45 GMT), the in Germany traded 0.4% lower, the in France fell 0.5%, and U.K.’s dropped 0.8%.
European stocks received a negative handover from Wall Street, with the blue chip dropping over 1,000 points, or almost 4%, the biggest one-day drop in over 2 years, after the U.S. for August came in Tuesday more than expected.
This raised the likelihood that the will keep raising interest rates at a sharp pace this year to combat inflation, even at the risk of the largest economy in the world falling into recession.
Markets are now pricing in a high possibility that the Fed will raise rates by 75 basis points next week, but the chance of a full 1% rate increase is now also being considered.
Back in Europe, the inflation situation is even more acute, with U.K. consumer prices rising in August, a rise on an annual basis.
Although this represents a slight dip from July, it still makes it likely the will continue its tightening path despite its forecast that the country will enter a lengthy recession in the fourth quarter.
In corporate news, Inditex (BME:) stock rose nearly 5% after the fashion giant, and owner of the Zara brand, reported a 24.5% jump in six-month and a higher profit than a year ago, helping the retail sector rise.
Redrow (LON:) stock rose 1% after the homebuilder said its quarterly exceeded pre-pandemic levels, although it noted the “buoyant” housing market has moderated recently.
Dunelm (LON:) stock rose 4% after the furniture retailer reported a “healthy” gross margin of 51.2%, despite soaring inflation.
Oil prices fell Wednesday in the wake of the strong U.S. inflation data, which raised the prospect of another hefty interest rate hike, lifting the dollar and likely weighing on further economic growth.
Helping limit the losses was the release of the from the Organization of Petroleum Exporting Countries, which reiterated forecasts for growth in global oil demand in 2022 and 2023, despite headwinds such as surging inflation.
U.S. crude stocks rose by just over 6 million barrels last week, according to data released Tuesday from the , and official data from the is due later in the session.
By 03:45 ET (07:45 GMT), traded 0.7% lower at $86.69 a barrel, while the contract fell 0.8% to $92.42.
Additionally, fell 0.3% to $1,712.55/oz, while traded 0.2% higher at 0.9992.
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