By Sara Sjolin, MarketWatch
European stocks closed sharply lower on Wednesday, weighed by the return of geopolitical concerns after comments by U.S. President Donald Trump and a round of disappointing eurozone data.
The pound dropped to a 2018 low after U.K. inflation unexpectedly slipped in April.
What are markets doing?
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +1.19% lost 1.1% to close at 392.58, pulling back from Tuesday’s close, which was the highest since Jan. 29. Wednesday’s loss marks the benchmark’s worst day since March 22, when it declined 1.6%.
In Italy, the FTSE MIB index /zigman2/quotes/210598024/delayed IT:I945 +1.14% slid 1.3% to 22,911.71 as traders waited for President Sergio Mattarella’s decision on the prime minister candidate put forward by a euroskeptic alliance to lead their coalition government.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.5463% fell to $1.1699 from $1.1780 late Tuesday in New York.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.3203% exchanged hands at a fresh 2018 intraday low of $1.3305, down from $1.3432 late Tuesday.
What is driving the market?
Stocks in Europe declined as part of a global selloff spurred by worries about Trump’s latest comments on North Korea and the China trade talks. The president said late Tuesday there is a “very substantial chance” the historic meeting between him and North Korea’s leader Kim Jong Un won’t happen in June as planned unless Pyongyang meets certain conditions.
Separately, Trump said Tuesday that he was “not satisfied” with the latest round of trade talks with China. Equity markets world-wide have rallied in recent days on signs of an easing in tensions between the world’s two largest economies, making a full-blown trade war appear less likely.
Closer to home, news emerged on Tuesday afternoon that the U.S. may not extend the exemption for the European Union on steel and aluminum tariffs. EU officials said the Trump administration had proposed cutting the trade bloc’s steel exports to the U.S. by 10%.
What’s going on in Italy?
Italian yields surged as uncertainty lingered over the country’s political future. The potential coalition of antiestablishment parties 5 Star Movement and the League have reportedly run into difficulties getting their prime minister candidate approved by President Mattarella.