Jun 22, 2022 03:44AM ET
By: AnalysisWatch
European stock markets fell on Wednesday. The week's rally fizzled out after rising inflation in the UK added to lingering concerns about aggressive monetary tightening and slowing growth.
At 03:45 ET, Germany's DAX traded 2.1% lower, France's CAC 40 fell 1.8% and Britain's FTSE 100 dropped 1.2%.
Europe's major indices posted small gains on Tuesday, following Monday's improvement after suffering heavy losses last week as a number of central banks around the world tightened monetary policy to curb runaway inflation.
Britain's consumer price index climbed to 9.1% year-on-year in May, up 0.7% month-on-month, and further gains are likely as the central bank predicted last week that inflation could reach as high as 11% in October.
A few speeches from European Central Bank policymakers are scheduled for later in the trading day, but the main focus of the day will be on the start of Federal Reserve Chairman Jerome Powell's two-day hearing before Congress later on Wednesday.
Investors will be on the lookout for further clues on whether another 75 basis point rate hike is on the cards at the Fed's July meeting, amid uncertainty over whether aggressive monetary tightening to combat increased inflation will force the US economy, the world's main growth engine, into recession.
Oil prices fell on Wednesday as traders worried about an economic slowdown in the US, the world's biggest crude consumer, ahead of Fed chairman Jerome Powell's appearance before Congress later on Wednesday.
Another factor weighing on the market is the Biden administration's drive to reduce rising fuel costs, an issue that is fast becoming a political issue ahead of the mid-term elections.
The American Petroleum Institute's weekly US oil inventory data for the week ending June 17 is due on Wednesday, a day later than usual after the US holiday on Monday.
In addition, gold futures fell 0.5% to $1,830.10/oz, while EUR/USD traded 0.2% lower at 1.0502.
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