Europe open: Stocks in the red after hawkish Fed minutes

European stocks fell in early trade as investors digested the release of hawkish Federal Reserve minutes.

At 0855 BST, the benchmark Stoxx Europe 600 index and France’s CAC 40 were both down 0.7%, while Germany’s DAX was 1.2% weaker.

At the same time, oil prices retreated as the greenback gained ground on US rate hike expectations. West Texas Intermediate fell 2% to $47.24 a barrel and Brent crude was down 2.3% to $47.83.

Basic resources also took a hit from the stronger dollar, which makes dollar-denominated commodities more expensive for holders of other currencies.

“European markets have opened sharply lower tracking losses in Asia amid concerns that the Fed may raise interest rates in the near term with June a possibility. Financial stocks are among the few holding their own this morning as resource stocks continue to be hardest hit amid failing oil and metal prices,” said Andy McLevey, head of dealing at stockbroker Interactive Investor.

Minutes from the latest Federal Open Market Committee released on Wednesday revealed that an interest-rate hike in June was a possibility, with a number of participants already angling for a hike at the April meeting.

The key phrase in the minutes was that “most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labour market conditions continuing to strengthen, and inflation making progress toward the Committee’s 2% objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June."

Airlines and travel and leisure stocks were dented by news that an EgyptAir plane carrying 66 passengers on a flight from Paris to Cairo had gone missing. There were reports early on Thursday that the plane had crashed off the Greek island of Karpathos.

Shares in Thomas Cook tanked after the FTSE 250 tour operator said it expects underlying earnings for the year to be at the lower end of market views, and with sentiment towards the sector hit by the EgyptAir news.

French oil services firm Technip surged after announcing an all-stock merger with US-based FMC Technologies.

Drug and chemicals group Bayer slumped after making an unsolicited takeover offer for seed company Monsanto.

Henkel nudged lower despite posting an increase in first-quarter profit.

Royal Mail was under the cosh despite reporting a better-than-expected profit for the year, as it warned the market remained challenging.

On the economic calendar, the latest European Central Bank minutes are due at 1230 BST. In the US, the Philadelphia Fed survey, Chicago Fed activity index and initial jobless claims are at 1330 BST. Leading indicators are at 1500 BST.