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European stocks recover from biggest slide since September

European stocks fell on Wednesday as investors worried about US monetary policy and the spread of the coronavirus, which led to the region’s biggest market drop since September. .

The Stoxx Europe 600 share index was in flat territory, while London’s FTSE 100 index gained 0.2%. France’s Cac 40 index fell 0.3% and Germany’s Dax fell 0.8%. Futures contracts that track Wall Street’s S&P 500 fell 0.3 percent, while those that track the Nasdaq 100 index fell 0.4 percent.

President Joe Biden’s nomination of Jay Powell to a second term as Chairman of the Federal Reserve earlier this week rattled the US government bond market, sending short-term debt prices lower. The move has spilled over into equities, with the Stoxx 600 index sliding 1.3% on Tuesday following a minor wobble on Wall Street the previous day.

Investors’ concerns were largely centered on the expectation that Powell might pursue a slightly more aggressive approach to curbing stimulus measures in times of crisis than Lael Brainard, who is widely seen as a counter-attack. His main competitor for the job.

A strong report on the US labor market, shows that claims for unemployment benefits fell to their lowest level for the first time since late 1960s last week, maybe add to that sentiment. Data on the core personal consumption expenditures price index, the Fed’s preferred inflation gauge, for October will be released in the morning in New York.

Consumer Price Index, another inflation gauge, rose fastest in October annual rate for three decades, according to data released this month.

Roger Lee, head of UK equity strategy at Investec, said: “We now have an environment where the debate in the market revolves around how high inflation can go and how What will the Fed’s response be? “It’s something that most people in the equity and fixed-income markets have never worked on.”

The US and European government debt markets were largely stable prior to the PCE release. Yields on the US 10-year Treasury note were flat at 1.66%, while the German equivalent was flat at negative 0.22%.

Elsewhere, New Zealand’s central bank on Wednesday increase interest rate by 0.25 percentage points to 0.75%, in a move designed to cool the economy and dampen rising home prices.

After raising interest rates for the second time in two months, the Reserve Bank of New Zealand also offered hawkish guidance on future moves, saying rates will likely need to rise above their neutral levels.

In Asia, Hong Kong’s Hang Seng index gained 0.1% and Shanghai’s CSI 300 index was flat.

Oil prices fell after the previous rally, with Brent falling 0.2 percent to $82.11 a barrel. President Biden on Tuesday authorized the shipment of 50 million barrels of oil – about 2.5 days of US oil consumption – to reduce gasoline prices for consumers.

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