European shares edge lower on U.S. rate hike bets
The pan-European STOXX 600 index slid 0.22% to 637.93 points, with basic resources leading declines, down 1.8%
European shares edged lower on Thursday as investors increased bets on a U.S. central bank rate hike after policymakers struck a hawkish tone, though easing oil prices helped temper inflation concerns.
The pan-European STOXX 600 index slid 0.22% to 637.93 points by 0915 GMT, with basic resources leading declines, down 1.8%.
An interim peace agreement between Iran and U.S. to end the war and reopen the Strait of Hormuz – a key international oil shipping route, has brought a relief for markets in recent days, with oil prices declining to early-March levels, trading near $78 a barrel.
Energy price-sensitive airlines Lufthansa and Air France advanced 1.7% and 3.1%, respectively.
In the U.S., the central bank held rates steady on Wednesday, but nine policymakers projected one rate hike this year. Traders see a 49.5% chance of a September increase and expect rates to remain unchanged thereafter through year-end, per CME Group’s FedWatch tool.
While we see headline inflation remaining elevated over coming months, we do not see second round effects feeding into core inflation, Mohit Kumar, an economist at Jefferies said.
If oil prices remain contained, we do not see inflation expectations moving higher, hence our view of no change from the Fed over coming months, he said.
The European Central Bank raised borrowing costs last week and traders anticipate another 25 basis point rate hike by year-end, according to LSEG-compiled data.
Meanwhile, Edenred climbed 15% after a media report said Britain’s BC Partners is weighing a takeover of the French voucher company.
Generali added 1.3% after a report that UniCredit is seeking to double its stake in the lender through Delfin, the Del Vecchio family holding company. UniCredit shares were up 0.3%.
EQT has reached an agreement to acquire UK’s Intertek for around £10.6 billion ($14.10 billion). Shares of EQT were down 1.5%.