European stocks fell on Wednesday after three consecutive bullish sessions as investors prepared for the Federal Reserve chairman’s remarks to the US Congress on the outlook for the economy and the course of monetary policy.
Fed Chairman Jerome Powell will testify in Congress today and tomorrow, with investors looking for evidence in his speech on the central bank’s plans for the coming months as he continues his campaign to tackle inflation. The Fed, as well as the Bank of England and other central banks, have dramatically raised interest rates in recent weeks to counter the inflation rally, and are planning new increases in the coming months. The speed with which central banks are tightening their policies worries investors who are now worried about the risk of a global recession.
On the board, the pan-European Stoxx 600 index lost 1.6% to 401.97 points.
The German DAX plunged 2.1% to 13,008.88 points, the French CAC 40 lost 1.95% to 5,847.05 points, while the British FTSE 100 fell 1.5% to 7,044.36 points.
In the periphery, the Italian FTSE MIB loses 2%, while the Spanish IBEX 35 falls 1.7%.
At the end of the day, data released today in the United Kingdom showed a new 40-year high for inflation despite the efforts of the country’s central bank to mitigate the upward pressure on prices with successive increases in interest rates. The data showed that annual inflation climbed to 9.1% in May, drawing a new impetus from the jump in food and energy prices.