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Investing.com – European stock markets weakened Wednesday, as a jump in U.S. inflation raised concerns the Federal Reserve could tighten its ultra-easy monetary policies sooner than previously expected.
At 3:55 AM ET (0855 GMT), the DAX in Germany traded 0.2% lower, the CAC 40 in France fell 0.2% and the U.K.’s FTSE 100 dropped 0.4%.
This cautious tone in Europe follows weakness in Asia and also on Wall Street overnight after data released Tuesday showed the U.S. consumer price index jumped 0.9% in June, climbing 5.4% on the year, the biggest jump in U.S. inflation in 13 years.
“Yet another blowout inflation reading makes it increasingly difficult for the Fed to stick to its position that elevated inflation readings are merely ‘transitory’,” said analysts at ING, in a note. “The case for a 2022 rate hike is strong.”
Prices are also rising in Europe, with U.K. inflation climbing 0.5% in June, a gain of 2.5% on the year, and the strongest reading since 2018. Spain and Slovakia also reported CPIs above expectations for June.
Later in the session, investors will carefully study comments from Fed Chairman Jerome Powell in his two-day semi-annual testimony to Congress for any sign that the latest numbers have changed his thinking.
The second-quarter earnings season continues in the U.S. Wednesday, with Bank of America (NYSE:BAC), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) all due to update before the market opens.
In Europe, Hugo Boss (DE:BOSSn) stock rose over 6% after the German fashion retailer forecast a jump in its annual revenue of between 30% and 35%. Tele2 (ST:TEL2b) stock also climbed 5% after the Swedish telecoms operator reported a rise of 8% in quarterly core earnings.
Additionally, AstraZeneca’s (NASDAQ:AZN) $39 billion buyout of U.S.-based rare diseases business Alexion (NASDAQ:ALXN) is expected to close next week as Britain’s competition watchdog cleared the deal.
Elsewhere, oil prices edged lower Wednesday after China’s crude imports fell 3% in the first half of the year, raising concerns about slowing demand at the world’s top importer.
However, the market remains elevated, closing Tuesday at the highest level since October 2018, after the American Petroleum Institute reported that crude inventories slid by more than 4 million barrels last week. This would be an eighth straight weekly draw, the longest run of declines since January 2018, if confirmed by government figures later on Wednesday.
At 3:55 AM ET, U.S. crude futures traded 0.3% lower at $75.04 a barrel, after climbing 1.6% Tuesday, while the Brent contract fell 0.2% to $76.31, after gaining 1.8% in the previous session.
Additionally, gold futures rose 0.2% to $1,812.55/oz, while EUR/USD traded 0.1% higher at 1.1787.
