European stocks moved lower on Wednesday as rising oil prices renewed inflation concerns ahead of the European Central Bank’s policy decision on Thursday.

The Euro Stoxx index fell 0.7%, while Germany’s benchmark DAX also declined 0.7%. France’s CAC 40 was down roughly 1% after the first hour of trading.

Higher oil prices remained the main driver of the session. Brent crude briefly reached the $100-per-barrel mark, and its continued rise pushed bond yields higher across the region ahead of the ECB decision. For equities, the concern is not only the increase in yields itself, but what it may signal about inflation, economic growth and tighter financial conditions. The ECB’s decision and accompanying policy guidance will be the next immediate focus for markets assessing how officials view those inflation and growth risks.

Banking stocks declined despite the rise in yields. Deutsche Bank fell 1.3% in Germany, while Société Générale, BNP Paribas and Crédit Agricole also traded lower in France.

Airbus was another drag on the DAX, declining 1.7% and adding to weakness among industrial and defence-related companies. Luxury stocks also remained under pressure, with LVMH down nearly 2% and falling to its lowest level since 2020.

Energy shares were among the main exceptions to the broader selling. The Stoxx Europe 600 Oil & Gas index was up 0.7% during the session.

In the United States, futures were little changed to slightly lower after Wall Street’s decline on Tuesday. S&P 500 futures were flat, Dow futures fell 0.1% and Nasdaq futures rose 0.1%.

US markets remained cautious, with investors also turning their attention to the US consumer price index report due Friday.

Source: InvestingLive