Source: Sharecast
While Trump denied reports that he was looking to fire Jerome Powell, the speculation still dented risk appetite in late-afternoon trading, leading to a late 0.6% fall on the Stoxx 600 index to 541.84. This was the fourth straight day in the red for the pan-European benchmark and its lowest finish since 4 July.
“We’re not planning on doing anything,” Trump told reporters following the market reaction. However, he added: “I don’t rule out anything, but I think it’s highly unlikely. Unless he has to leave for fraud.”
The denial sparked a slight recovery for stocks on Wall Street after Europe's markets closed, though gains were limited with the three main US indices rising between 0.1-0.3%.
"[Trump] hasn’t been shy in expressing displeasure in Powell’s decision-making, demanding the Fed bring down rates to help drive economic activity. He wants someone new behind the wheel at the central bank, and someone who will influence looser monetary policy," said Dan Coatsworth, investment analyst at AJ Bell. “Investors normally like the prospect of rate cuts, yet Trump’s potential interference might be a step too far in many people’s opinion."
Other comments from the US president were also in focus after he warned that stringent tariffs on pharmaceutical products and semiconductors could come into force in a little over a fortnight, as his erratic global trade war continued.
In economic news on Wednesday, UK inflation came in higher than expected, hitting 3.6% in June, according to data released by the Office for National Statistics. Economists had been expecting an unchanged reading of 3.4% from May.
Market movers
ASML fell 11% after missing expectations for revenue guidance in the current quarter and warned of the possibility of no growth ahead. The news also hit European chipmakers BE Semiconductor and ASMI.
Switzerland’s Richemont edged higher after a jump in quarterly sales, despite the geopolitical uncertainty weighing on the global luxury market. The owner of Cartier and Van Cleef & Arpels, among others, said group sales came in at €5.4bn in the three months to 30 June, up 3% or by 6% on a constant currency basis.
Meanwhile, shares in Renault tanked 18% after the French automaker lowered its full-year margin and cash flow guidance which it blamed on a "deterioration" of market conditions and heightened competition. As a result, Renault said it was pursuing a "strict commercial policy" and prioritising value creation over volume, as well as stepping up its short-term cost-cutting plan.