INSUBCONTINENT EXCLUSIVE:
European shares fell for the fourth straight session on Wednesday, as bets on an aggressive half-point cut in US interest rates next month
collapsed following a more measured than expected message from Federal Reserve officials.
Fed Chair Jerome Powell said on Tuesday the
central bank is "insulated from short-term political pressures", pushing back on pressure from President Donald Trump to cut interest rates
and saying a cut next month is not locked in.
Markets still firmly expect the US central bank to ease policy but comments from Powell and
others were enough to weaken bets on the decisive new support for growth that has driven stock markets 4 per cent higher this month.
The
pan-European STOXX 600 index fell 0.3 per cent by 0756 GMT
Banking stocks, which unlike consumers, retailers or manufacturers tend to benefit from higher interest rates, outperformed.
"There is a lot
of digesting of Fed commentary from last night
Both Powell and (St Louis Fed chief James) Bullard poured cold water over expectations for a more than 25 bps rate cut in July," said Mark
Taylor, sales trader at Mirabaud Securities in London.
"If you look at expectations for the full year we're still at around three rate cuts,
so the longer picture is unchanged, it's the dialling back of some of the expectations which is partly behind the reason for the rotations
we're seeing."
European markets saw their biggest sell-off in more than two years in May, hit by a cocktail of concerns over trade tensions,
the global economic cycle and Brexit, and traders say the mood is still shaky.
The next big set piece is this weekend's G20 summit,
starting on Friday, eyed for a return to top level talks between the United States and China on the trade tensions that have dominated stock
market thinking for the past year.
One bright spot was better-than-expected results overnight for one of the chip world's big players,
US-based Micron Technologies
That supported semiconductor companies globally, with European players Infineon, Siltronic , and Ams AG up between 0.7 per cent and 3.5 per
cent.
"That's a relief move but I'm not sure if it's going to have huge amount of legs going forward unless the European chipmakers can
say something similar in their outlook as we go through earnings season," Taylor said.
Energy stocks gained 0.5 per cent, posting the
biggest gains among major European sectors, as oil prices rose 1 per cent in the face of worries about US-Iran relations.
German industrial
conglomerate Thyssenkrupp gained 3 per cent, and was among the biggest gainers on the main index, on a report of a possible offer from Kone
for the company's elevator business.
Following closely behind, Adidas rose 2.4 per cent after Berenberg raised its rating on the sporting
goods company's shares to "buy"