European stocks bounce off lowest in more than a year after Powell remarks (updated)

Groep Brussel Lambert NV

22/06/2022 10:06

(For a Reuters live blog on U.S., UK and European stock
markets, click  LIVE/  or type LIVE/ in a news window)
    * Wall Street turns positive, helping sentiment
    * Oil majors slide as crude dives
    * Defensives gain, capping losses 
    * ArcelorMittal, other steel makers fall on JPM downgrade

 (Updates to close)
    By Sruthi Shankar and Susan Mathew
    June 22 (Reuters) - European stocks bounced off session lows
on Wednesday after Federal Reserve Chair Jerome Powell said the
U.S. central bank is "strongly committed" to bringing down
inflation. 
    Wall Street erased losses to turn positive after the remarks
at a hearing before the U.S. Senate Banking Committee, while the
pan-European STOXX 600  .STOXX  closed down 0.7%, after having
fallen 1.8% to its lowest since January 2021. urn:newsml:reuters.com:*:nL1N2Y917N
    Analysts said markets took heart from the lack of surprises
in the comments.  urn:newsml:reuters.com:*:nL1N2Y907U 
    "We are seeing a reaction akin to something along the lines
of a medicine that tastes bad is normally the one that makes you
better soonest," said Stuart Cole, senior macro strategist at
Equiti Capital.
    "Runaway inflation is just as damaging for stock valuations
as a possible recession. The negative growth story Powell's
comments imply are being tempered by a sense of relief that the
authorities are taking the inflation threat seriously." 
    Equity markets took a beating last week as recession fears
heightened after the Fed raised its key interest rate by
three-quarters of a percentage point, and signalled more. The
Bank Of England also raised rates and the European Central Bank
is due to start its hiking cycle next month.  urn:newsml:reuters.com:*:nW1N2X9040 
    Data on Wednesday showed soaring food prices pushed British
consumer price inflation to a new 40-year high of 9.1% last
month, underlining the severity of the cost-of-living crunch.
UK's blue-chip FTSE 100  .FTSE  dropped 0.9%.  urn:newsml:reuters.com:*:nL8N2Y917G
    Weighing the most were material stocks  .SXPP  as iron ore
and copper prices slumped on china supply and growth worries.
Oil and gas stocks  .SXEP  slipped 3.3% as crude prices dropped
on U.S. President Joe Biden's plan to cut fuel costs for
drivers.  IRONORE/   MET/L   O/R 
    Gains in defensive sectors such as real estate  .SX86P ,
food and beverages  .SX3P  and healthcare  .SXDP  capped losses.
    A combination of surging inflation, tighter monetary
policies, the Ukraine war and a slowdown in China's economy has
pushed the wider STOXX 600 down about 18% from its all-time
closing high hit in January.
    Germany's DAX  .GDAXI  dropped 1.1% as BASF  BASFn.DE  slid
5.8% after the German chemical group's CEO said the company is
likely to face a considerable downturn early in the second half
of the year.  urn:newsml:reuters.com:*:nL8N2Y84MF
    European steel companies such as ArcelorMittal  MT.AS ,
Voestalpine  VOES.VI  and Salzgitter  SZGG.DE  fell in the range
of 13.1% and 11.1% after JPMorgan downgraded the stocks, saying
steel prices are yet to bottom.  urn:newsml:reuters.com:*:nL8N2Y91B6
    Norway's Mowi  MOWI.OL  tumbled 7.3% after Groupe Bruxelles
Lambert (GBL) sold a 3.5% stake in the world's largest fish
farmer.  urn:newsml:reuters.com:*:nL8N2Y91SJ 

 (Reporting by Sruthi Shankar in Bengaluru; Editing by Shailesh
Kuber, Uttaresh.V and David Gregorio)
 ((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 223
8780; outside U.S. +91 80 6182 2787;))