By Peter Nurse
Investing.com - European stock markets are traded sharply lower Thursday, weighed by concerns from the Federal Reserve about the state of the U.S. recovery.
At 3:45 AM ET (0735 GMT), the DAX in Germany traded 0.8% lower, the CAC 40 in France fell 0.9% and the U.K.'s FTSE index was down 0.6%.
The path to economic recovery for the U.S. economy from the Covid-19 outbreak remains highly uncertain, the Federal Reserve warned, according to minutes from its latest meeting, released late Wednesday.
“The minutes to the July 29th FOMC meeting are not especially reassuring,” said analyst James Knightley at ING, in a research note.
“The commentary suggests an ongoing weak economic backdrop whereby inflation remains persistently low yet there is little inclination to offer additional imminent support to the economy.”
In Europe, the minutes of the latest European Central Bank monetary policy meeting are due to be published later Thursday.
Looking at the corporate sector, Antofagasta (LON:ANTO) stock dropped 2.9% after the Chile-based miner posted a lower profit for the first half of the year as copper production and prices declined amid the pandemic.
Premier Oil (LON:PMO) dropped 23% after it plans to ask investors for another $300 million in new equity ahead of the acquisition of BP 's (LON:BP) North Sea assets. The firm already planned to rise $230 million through an equity raise.
Shares in French hotels group Accor (PA:ACCP) rose 2.6% after Le Figaro newspaper reported that the company had examined a potential merger with British rival InterContinental Hotels, up 2.3%.
Frasers (LON:FRAS) climbed 9.7% after seeing "a semblance of normality" returning, while reporting a 20% drop in annual profits as lockdown store closures led to "the most challenging year" in its history.
Meanwhile, tensions between the U.S. and China, the globe’s two economic superpowers, were ratcheted up another notch after the U.S. announced it is suspending its extradition treaty with Hong Kong and ending reciprocal tax treatment with the former British colony.
The moves are part of the Trump administration’s efforts to pressure China over the imposition of a national security law that curtailed many of Hong Kong’s freedoms.
Oil prices weakened, as the Fed minutes amounted to a warning about the recovery in demand, while U.S. oil inventories dropped for a fourth straight week, but by only 1.6 million barrels, less than expected.
Members of OPEC+, a group of major oil producers, warned Wednesday that the global rebound in demand was taking place at a slower pace than expected, and a second wave of the Covid-19 virus could do even more damage.
U.S. crude futures traded 0.9% lower at $42.73 a barrel, while the international benchmark Brent contract fell 0.6% to $45.08.
Elsewhere, gold futures fell 1.2% to $1,947.20/oz, retreating after the dollar rebounded on the back of the Fed’s comments. EUR/USD traded 0.2% higher at 1.1858 after a similar sharp drop.