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Europe Markets: European stocks and U.S. equity futures are under pressure as inflation worries persist

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European stocks were under sharp pressure on Wednesday, tracking losses in Asia and on Wall Street, as investors remain caught up in worries about inflationary pressures, with the minutes of the Federal Reserve’s latest meeting swinging into focus for later.

A weaker day in Asia saw the Nikkei 225
NIK,
-1.28%

drop 1.2% and Australia’s S&P/ASX 200
XJO,
-1.90%

benchmark down nearly 2%. Picking up the baton, the Stoxx Europe 600
SXXP,
-1.14%

fell 1.3% to 437.15, with similar losses seen for the German DAX
DAX,
-1.33%
.
The French CAC 40
PX1,
-1.03%

and the FTSE 100 indexes
UKX,
-1.08%

were off more than 1% each.

Dow futures
YM00,
-0.50%

fell more than 200 points, with S&P 500 futures
ES00,
-0.67%

down 0.8% and Nasdaq-100 futures
NQ00,
-1.09%

off 1.2%. Major U.S. stock indexes finished lower on Tuesday, as enthusiasm over a strong batch of earnings from major retailers competed with concerns over lofty valuations and signs of some inflationary pressures. Weaker-than-expected housing data didn’t help.

Global yields were also under pressure, with that of the 10-year German bund
TMBMKDE-10Y,
-0.084%

up 1 basis point to -0.08%. The yield on the 0-year Treasury bond
TMUBMUSD10Y,
1.663%

rose 2 basis points to 1.6599%.

“The inflation fears, the virus fears, the fears of seeing a slower-than-thought or a delayed recovery due to the new restriction measures on the Indian variant of the coronavirus are all disquieting for the average investor,” said Ipek Ozkardeskaya, senior analyst at Swissquote, in a note to clients.

The minutes of the Federal Open Market Committee meeting of April 27-28 will be released later on Wednesday, with investors watching out for any indications on whether the central bank is considering a shift in its accommodative monetary stance.

Adding to worries over global inflation, U.K. data showed consumer prices rose 1.5% on the year in April, twice the rate of inflation reported in March, according to the Office for National Statistics.

Oil prices were also under pressure, with crude
CL00,
-1.47%

and Brent futures
BRN00,
-1.32%

dropping 1% each. Those losses came after data from the American Petroleum Institute reportedly showed an unexpected rise in U.S. crude supplies — 620,000 barrels for the week ended May 14. Report of potential progress on Iran nuclear talks saw oil prices close lower on Wednesday.

Crude oil weakness dragged down shares of heavily weighted energy companies, with Royal Dutch Shell
RDSA,
-1.69%

RDS.A,
-1.76%
,
BP
BP,
-0.81%

BP,
-1.69%

and Total
FP,
-1.73%

TOT,
-1.38%

each down 1% or more.

Technology names were under pressure, with heavily weighted semiconductor equipment provider ASML Holding
ASML,
-0.50%

ASML,
-3.02%

dropping over 2%. Shares of German business software group SAP
SAP,
+0.47%

SAP,
-1.23%

fell 1.4%.

Shares of John Laing 
JLG,
+11.19%

surged 11%, after New York private-equity firm KKR & Co.
KKR,
-0.81%

said it has agreed to buy the U.K.-listed infrastructure investor and manager for £2 billion ($2.84 billion) in cash.

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