European Shares Set To Extend Losses On Fed Rate Hike Worries

european market 021219 14sep22 lt

European stocks look set to extend losses from the previous session on Wednesday as traders lean toward another 75-basis-point rate hike at next week's FOMC meeting.

Nomura analysts have called for a full percentage hike in short-term interest rates, citing the emergence of upside inflation risks.

Asian markets tumbled, with tech stocks among the worst hit, as another hot U.S. inflation reading killed any chance of a downward shift in Fed tightening.

Investors were also reacting to a Reuters report suggesting that the U.S. was considering new sanctions against Beijing to deter a potential invasion of Taiwan.

On the other hand, Taiwan urged the European Union to back its claim of sovereignty.

The dollar pushed towards a 24-year peak against the yen amid a jump in U.S. yields.

Gold held steady around $1,700 per ounce, while oil edged lower amid concerns over China's zero-Covid policy and the country's struggling property market.

In economic releases, U.K. August consumer inflation reading, Eurozone July industrial production data and a report on U.S. producer prices for August will be released later in the day.

U.S. stocks tumbled overnight to snap a four-session winning streak, as hotter-than-expected inflation numbers for August dented investor optimism over price decline and the pace of rate hikes.

The Dow lost 3.9 percent, the tech-heavy Nasdaq Composite plunged 5.2 percent and the S&P 500 plummeted 4.3 percent to log their worst day since June 2020 as data showed monthly CPI increased at an annual pace of 8.3 percent, more than economists' median estimate of 8.1 percent.

European stocks lost ground Tuesday on worries about high inflation and aggressive policy tightening by the Federal Reserve.

The pan European Stoxx 600 dropped 1.6 percent. The German DAX fell 1.6 percent, France's CAC 40 index gave up 1.4 percent and the U.K.'s FTSE 100 declined 1.2 percent.

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