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Europe close: Sell-off on Wall Street carries across the Atlantic

By Alexander Bueso

Date: Wednesday 18 May 2022

Europe close: Sell-off on Wall Street carries across the Atlantic

(Sharecast News) - European shares finished lower as heavy selling on Wall Street hit investor sentiment across the Atlantic following hawkish remarks from Fed chief Jerome Powell the night before.
"While it was expected that this bounce would be short-lived, the rapidity with which it has unravelled will mean that even more investors will start heading for the exits," said IG chief market analyst Chris Beauchamp.

"While that is of little comfort to hard-pressed consumers, it does at least offer the chance of some relief from higher inflation in the medium term."

The pan-European Stoxx 600 was down 1.14% at 433.95, alongside a 1.26% drop for the German Dax to 14,007.76, while the FTSE Mib was off by 0.89% to 24,085.82.

In an interview published overnight with the Wall Street Journal, Powell dispelled any notion that the central bank might be shy away from pushing short-term official interest rates above the so-called neutral level in order to rein in inflation.

Risk aversion also dragged front-dated Brent down by 3.1% to $108.83 a barrel on the ICE and euro/dollar slipped 0.64% to 1.0482.

Eurostat meanwhile reported that euro area CPI was unchanged in April at up by 7.4% year-on-year, the same as the month before.

However, that was still well over twice the ECB's target.

On that note, two of the European Central Bank governing council's members more dovish members, Finnish central bank chief Olli Rehn and Spain's Pablo Hernández de Cos weighed in on Wednesday in support of a first interest rate hike possibly as soon as July.

In equity news, shares in Siemens Gamesa soared 13% on a report Siemens Energy is reportedly planning a bid for the shares in the renewable energy firm it does not already own.

That helped Spain's top-flight Ibex 35 outperform peers, finishing 0.01% up to 8,476.40.

Siemens Energy is preparing to make an all-cash offer in the next week with a view to delisting the firm. It already owns 67% of Gamesa.

Going in the other direction, TUI shares plunged 13% after the travel company placed 162.3m shares at €2.62 each.

Shares in Dutch bank ABN Amro plummeted 12% as the lender reported higher costs despite posting better-than-expected profits.

Euronext gained 4% after the pan-European stock exchange's quarterly revenue profited from high market volatility.


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