Europe midday: Shares tumble after UK inflations hits 9%
European shares turned sharply lower on Wednesday after two days of gains, after another rise in UK inflation hit sentiment along with a fall in oil and metal prices. The pan-European Stoxx 600 index was down 1.43% as investors feared more aggressive interest rate rises by central banks panicking about soaring inflation could trigger a recession. Oil prices also slumped as US President Joe Biden moved to bring down soaring fuel costs for American motorists.
Investors will also be watching for any comments on inflation from US Federal Reserve chair Jerome Powell when he testifies before lawmakers in Washington. In the UK, official data revealed British consumer price inflation hit a new 40-year high last month of 9.1%, driven by increasing food prices. ''The latest temperature check of the UK economy shows the mercury rising again, with no end yet in sight to feverish price rises.
The Bank of England has already forecast that inflation will hit 11% by the Autumn, and it's steadily creeping towards that ugly marker," said Hargreaves Lansdown analyst Susannah Streeter. "With the economy taking on more of a sweat, the pressure is now on the Bank of England to apply much cooler compresses in the form of successive interest rate rises over the next few months to try and reduce demand and bring down prices." In equity news, shares in Belgian chemicals and battery materials company Umicore slumped after the company set new financial targets, saying it saw potential to more than double revenues by 2030 and hit adjusted core profit margins of more than 20%.
BASF slid after the German chemical group said it was likely to face a considerable downturn early in the second half of the year. Norway's Mowi, the world's largest fish farmer, tumbled after a share placing. Shares in UK bank NatWest rose after the UK government, its largest shareholder, extended plans to sell down its stake for another year.
UK-listed sportswear retail chain JD Sports also gained after annual profits more than doubled.
Reporting by Frank Prenesti at Sharecast.