European shares bounced off session lows on Wednesday after Federal Reserve Chair Jerome Powell said the US central bank was “strongly committed” to curbing inflation.
Wall Street erased losses and moved into positive territory following statements at a hearing before the US Senate Banking Committee, while the pan-European STOXX 600 index closed down 0.70% at 405.74 after falling 1.8% to the lowest level since January 2021.
Analysts said markets were buoyed by the lack of surprises in the statements.
“Runaway inflation is as damaging to stock valuations as a potential recession. The negative growth story that Powell’s comments suggest is being tempered by a sense of relief that policymakers are taking the inflationary threat seriously,” said Stuart Cole, chief macrostrategist at Equiti Capital.
Basic materials papers weighed the most, after iron ore and copper prices eased on China’s supply and growth concerns.
Oil and gas shares tumbled 3.3% on declining oil prices due to US President Joe Biden’s plan to cut fuel costs for motorists.
Gains in defensive sectors such as real estate, food and beverage and healthcare limited losses.
A combination of rising inflation, tighter monetary policies, the war in Ukraine and a slowdown in China’s economy pushed the STOXX 600 down about 18% from the all-time closing record it hit in January.
- In London, the Financial Times index dropped 0.88%, to 7,089.22 points;
- In Frankfurt, the DAX index fell 1.11% to 13,144.28 points;
- In Paris, the CAC-40 index lost 0.81%, to 5,916.63 points;
- In Milan, the Ftse/Mib index had a devaluation of 1.36%, to 21,788.57 points;
- In Madrid, the Ibex-35 index registered a drop of 1.10%, to 8,145.40 points;
- In Lisbon, the PSI20 index depreciated by 0.52%, to 5,921.52 points.
Source: CNN Brasil
