European Markets Close Lower Following Fed’s Hawkish Comments

European Union - Mika Baumeister via Unsplash
European Union - Mika Baumeister via Unsplash

European markets finished lower on Wednesday following hawkish comments from U.S. Federal Reserve officials and more sanctions against Russia. 

The pan-European Stoxx600 plunged by 1.6%, with nearly all industries and major bourses decreasing to negative territory. Travel and leisure stocks were the biggest losers with a 3.9% plunge for the session, and healthcare stocks surged slightly by 0.2%. 

During a Minneapolis Fed webinar, Fed Governor Lael Brainard said on Tuesday night that Federal Reserve will have to reduce the balance sheet fast and raise interest rates regularly to curb inflation. Following the comments, major U.S. averages plummeted, while the 10year Treasury yield to a new 2022 high. 

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San Francisco Fed President Mary Daly told the Native American Finance Officers Association that inflation at a 40-year high is “as harmful as not having a job” and assured the group that the Fed is ready to take action. 

Anneka Treon, managing director at Kempen, told CNBC on Wednesday that the “bandage” of the Fed put — the market belief that the Fed will step in to implement policies limiting a stock market pullback — has “essentially been ripped off altogether.”