European Stocks Close Lower After Hawkish Comments From Powell

(RTTNews) - European stocks closed weak on Wednesday, extending recent losses, as Federal Reserve Chair Jerome Powell reaffirmed the central bank's commitment to bringing inflation down to its target rate of 2%.

Hotter than expected UK inflation data raised concerns of further tightening by the Bank of England (BoE). The BoE, scheduled to announce its monetary policy on Thursday, is expected to raise rates by 25 basis points.

The pan European Stoxx 600 declined 0.5%. The U.K.'s FTSE 100 edged down 0.13%, Germany's DAX fell 0.55% and France's CAC 40 ended 0.46% down, while Switzerland's SMI closed lower by 0.38%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Netherlands, Norway, Portugal, Sweden and Turkiye closed weak.

Greece, Poland and Russia ended higher, while Iceland, Ireland and Spain closed flat.

In the UK Market, Smith (DS), Smurfit Kappa Group, Persimmon, Barratt Developments, Natwest Group, Burberry Group and Fresnillo lost 3 to 6%.

BT Group, RS Group, Lloyds Banking Group, RightMove, Endeavour Mining, Anglo American Plc and Barclays also ended sharply lower.

BP, CRH, Shell, Covatec Group and British American Tobacco gained 1 to 2.3%.

In the German market, Merck, Deutsche Post, Puma and Vonovia lost 2 to 2.8%.

Continental, Qiagen, Brenntag, Mercedes-Benz, SAP, MTU Aero Engines and Infineon Technologies closed lower by 1 to 1.6%.

Adidas climbed about 4.3% and Covestro surged 3.6%. Commerzbank gained about 2%, while Siemens Energy and Deutsche Bank ended higher by 1.6% and 1.2%, respectively.

In Paris, STMicroElectronics, WorldLine, Capgemini, Eurofins Scientific, Airbus Group and Teleperformance ended down 1.6 to 2.3%.

Hermes International, Dassault Systemes, Pernod Ricard and L'Oreal also ended notably lower.

Danone gained more than 2%. Alstom, TotalEnergies, Renault, BNP Paribas and Thales also closed higher.

Testifying before the House Financial Services Committee, Powell reiterated the Fed is likely to continue raising interest rates in an effort to contain stubbornly elevated inflation.

"Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year," Powell said.

The Fed left rates unchanged last week, but the central bank's latest projections suggest it plans to resume raising rates later this year, forecasting a rate of 5.6% by the end of 2023.

If the Fed decided to revert to its recent quarter-point increases, the forecast suggests the central bank will raise rates two more times this year.

The forecast for additional rate hikes come as Powell noted inflation pressures continue to run high and said the process of getting inflation back to the Fed's 2% target has a "long way to go."

In European economic news, official data showed that U.K. consumer prices logged a steady growth rather than a slowdown in May. Core inflation accelerated further, adding pressure on the Bank of England to raise the benchmark rate by half a percentage point.

Consumer price inflation came in unchanged at 8.7% in May while analysts had forecast the rate to ease to 8.4%. Core inflation that excludes energy, food, alcohol and tobacco climbed to 7.1%, which was the highest since March 1992.

UK house prices increased at the slowest pace in just over two-and-a-half years in April, figures from the Office for National Statistics showed. The house price index climbed 3.5% year-on-year in April, slower than the 4.1% increase in the previous month.

Data from the European Automobile Manufacturers' Association, or ACEA, showed new car sales in the European Union rose 18.5% year-on-year in May, following a 17.2% growth in April.