European markets were hit hard on Wednesday as investors reacted to a lack of progress in the US debt ceiling negotiations, an increase in UK core inflation, and further losses for luxury stocks. The pan-European STOXX 600 fell 1%, with almost all sectors posting losses.
The biggest drag came from luxury goods makers, which dropped 2% after LVMH reported weaker-than-expected sales growth for its fashion and leather business. This was followed by banks, down 0.9%, as worries about global economic growth weighed heavily on sentiment across the sector; while miners also lost ground due to concerns over demand from China slowing down further amid trade tensions between Beijing and Washington DC.
In addition to this news, UK core inflation rose more than expected in August according to official data released earlier today – adding another layer of uncertainty into the mix given that it could lead policymakers at the Bank of England towards raising interest rates sooner rather than later if prices continue their upward trajectory going forward into 2019/2020 financial year.
Overall, these factors combined have caused European shares to slump 1% as risk appetite sours among investors who are now looking ahead cautiously before making any major decisions regarding their portfolios until some clarity is provided around these issues during upcoming weeks or months ahead.
Read more at Reuters
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