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June 9, 2022

European stocks slid lower on Thursday ahead of the latest interest rate decision from the European Central Bank.

The pan-European Stoxx 600 fell 0.7% in early trade, with basic resources shedding 1.4% to lead losses as all sectors traded in negative territory except oil and gas, which gained 0.6%.

In terms of individual share price movement, British supermarket chain Sainsbury’s fell more than 5% in early deals to the bottom of the Stoxx 600, while compatriot sugar company Tate & Lyle climbed more than 4% after its full-year earnings report.

European markets are focused on the forthcoming monetary policy meeting and decision from the ECB on Thursday. The central bank is expected to confirm its intention to raise interest rates next month. The move comes after inflation for the 19-member euro area hit another record high in May.

Investors will be watching ECB President Christine Lagarde’s press conference following the meeting to gauge how aggressively the bank could act.

Asia-Pacific stocks were mixed in Thursday trade, with investors watching for market reaction to China’s trade data for May, which performed above expectations. Meanwhile, U.S. stock futures retreated in early premarket trading on Thursday after the major averages ended the regular session lower and U.S. Treasury yields rose.

Investors in the U.S. continue to look for signs of slowing economic growth ahead of May’s consumer price index reading, which is slated for Friday. The data is expected to come in slightly below April’s numbers and could indicate that inflation has reached its peak.

Thursday’s negative start to trade continues a general downward trend for markets as inflation and growth fears continue to depress investor sentiment.

Randall Kroszner, professor of economics at the University of Chicago and former governor of the Federal Reserve System, told CNBC on Thursday that inflation and rising employment costs were beginning to cause problems for corporates, driving a recent “repricing in equity markets”

“People are realizing that sure, firms can start to pass along costs and so price increases in general have been much higher than they have been before, but their costs are going up and the concern is that the costs are going to continue to go up, as they will then face more difficulty in continuing to raise those prices. I think that’s one of the reasons why we’ve been seeing such downward pressure on equities,” Kroszener told CNBC’s “Squawk Box Europe.”

Source: CNBC
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