European Stocks Close On Weak Note On Interest Rate Concerns

European stocks closed on a very weak note on Wednesday with several markets dropping to multi-week lows, amid uncertainty about the outlook for Fed interest rates, ahead of some crucial inflation data, including a reading on U.S. income and spending.

Higher bond yields and a surge in oil prices due to heightened tensions in the Middle East stoked concerns that interest rates will likely stay higher for longer. Recent hawkish comments from a few Fed officials weighed as well.

The pan European Stoxx 600 shed 1.08%. The U.K.’s FTSE 100 drifted down 0.86%, Germany’s DAX dropped 1.1% and France’s CAC 40 lost 1.52%. Switzerland’s SMI ended down 0.51%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Iceland, Netherlands, Norway, Poland, Portugal, Spain, Sweden and Turkiye closed notably lower.

Russia bucked the trend and ended modestly higher.

In the UK market, National Grid shares tanked nearly 21%. Ocado Group tumbled 12.25%. RS Group, National Grid, Entain, Mondi, WPP, Barratt Developments, Barclays Group, Melrose Industries and Reckit Benckiser lost 2 to 4.5%.

Anglo Amerian Plc shares declined sharply as the company rejected BHP’s request for more time to discuss the £39 billion mining sector mega-merger.

Fresnillo gained nearly 2% following a rating upgrade of the stock by RBC Capital markets. Beazley climbed about 1.3% and Next ended 1.1% up. Associated British Foods, United Utilities, B&M European Value Retail, Shell and Admiral Group also posted notable gains.

In the German market, Siemens Energy declined nearly 4%. Infineon, Bayer, Sartorius, Porsche, Fresenius Medical Care, RWE, Vonovia, Continental, Commerzbank, BMW, Volkswagen and BASF lost 2 to 3.1%.

Adidas rallied more than 2%. Merck and Hannover Rueck posted modest gains.

In the French market, Credit Agricole plunged more than 7%. Edenred, Capgemini, ArcelorMittal, LVMH, Publicis Groupe, Pernod Ricard, STMicroElectronics, Kering, Teleperformance, Schneider Electric and Accor lost 2 to 4.3%.’

Michelin gained marginally. Renault surged about 3.2% after Goldman Sachs upgraded the stock’s rating to “buy” from “neutral.”

On the economic front, Germany’s consumer price inflation accelerated in May and core inflation remained steady, suggesting the stickiness of inflation that could cloud the outlook for the European Central Bank as it prepares to lower interest rates next week.

Inflation, based on the harmonized index of consumer prices or HICP, climbed to 2.8% from 2.4% in April.

Consumer confidence in Germany is set to improve further in June on rising economic and income expectations amid slowing inflation and rising wages, results of a survey showed.

The consumer confidence index rose to -20.9 in June from a revised -24.0 in the previous month, the survey published jointly by GfK and the Nuremberg Institute for Market Decisions showed Wednesday. Overall consumer climate improved for the fourth time in a row.

France’s consumer confidence held steady in May and still remained well below its long-term average. The consumer sentiment index stood at 90.0 in May, the same as in April. Meanwhile, economists had expected the score to rise to 91.

Eurozone private sector credit growth remained weak and money supply posted the fastest growth in a year in April but the pace of expansion was subdued, data published by the European Central Bank showed. Claims on the private sector increased 0.7% annually after rising 0.8% in March. Meanwhile, adjusted loans to the private sector posted a slightly faster growth of 0.9%.