European stocks fall amid hawkish Fed comments, new Russia sanctions; Stoxx 600 down 1%

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LONDON — European markets are set for a lower open on Wednesday against a backdrop of hawkish comments from U.S. Federal Reserve officials and further sanctions against Russia.

Britain’s FTSE 100 is seen around 30 points lower at 7,584, Germany’s DAX is set to slide by around 59 points to 14,365 and France’s CAC 40 is expected to drop around 28 points to 6,618, according to IG data.

Fed Governor Lael Brainard said during a Minneapolis Fed webinar on Tuesday night that the central bank will need to reduce its balance sheet quickly and continue to increase interest rates at a steady pace in order to contain surging inflation. The comments sent major U.S. averages lower and the 10-year Treasury yield to a new 2022 high.

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

Global investors are also awaiting details of fresh international sanctions against Russia after allegations emerged of civilian killings in Ukrainian towns now recaptured from Russian forces. The European Commission on Tuesday proposed banning Russian coal as part of its next round of sanctions.

U.S. stock futures were flat in early premarket trade as investors stateside await the release of the Fed’s Tuesday meeting minutes, hoping for further details about the Federal Open Market Committee’s plan to reduce the central bank’s balance sheet.

Shares in Asia-Pacific declined on Wednesday, tracking overnight losses on Wall Street with Chinese tech stocks in Hong Kong falling sharply.

UBS holds its annual general meeting on Wednesday while on the data front, the euro zone’s construction PMI readings for March and February retail sales are due.

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