LONDON — European stocks fell on Tuesday as investors looked ahead to the Federal Reserve’s next meeting and U.S. inflation data.
The Stoxx 600 index closed down 0.9%, paring slight gains earlier in the session. All sectors and major bourses closed in the red, with banks leading losses, down 2.17%.
British computing startup Raspberry Pi closed up 38.5% following its market debut on London’s main exchange.
Shares in beleaguered French IT company Atos, meanwhile, fell more than 15% after the firm announced a rescue deal which is set to result in a major dilution of existing shareholders.
U.K. employment data released Tuesday showed the number of payrolled employees was up 0.6% year on year in May, but the unemployment rate ticked higher to 4.4% from 4.3% on a quarterly basis.
Annual growth in wages excluding bonuses held at 6% over the three months from February to April, presenting a potential concern for the Bank of England as it considers when to reduce interest rates.
“What the Bank of England crucially wants to see is wage inflation fall more than it has, especially with the headline rate of inflation very much near target,” Richard Carter, head of fixed interest research at Quilter Cheviot, said in a note.
“The BoE will be incredibly cautious to cut rates at a period when spending power is high for consumers and potentially triggering a fresh inflationary bout. As such, today’s data will continue to put a dampener on a rate cut in June or August, with November remaining the likeliest date to see that first fall.”
Wednesday will see the release of U.K. gross domestic product figures for April.
Regional markets fell on Monday as traders continued to react to the EU Parliament elections and French President Emmanuel Macron’s decision to call a snap parliamentary election after the right-wing National Rally party made strong gains.
Market attention is now shifting to the U.S. Federal Reserve’s latest rate decision and May’s consumer price index, which will be released Wednesday. The U.S. inflation data could be a key test for markets, especially after Friday’s strong jobs report continued to suggest the central bank could hold off on lowering rates.
Investors will be keeping a close eye on the Fed’s updated projections on the timing and frequency of rate cuts, known as the “dot plot.” Markets are now pricing in just one rate cut this year, in November, according to the CME FedWatch Tool.
U.S. stocks moved lower Tuesday in anticipation of the start of the two-day meeting.