Europe open: Stocks nudge lower amid US rate hike concerns

European stocks nudged lower in early trade, taking their cue from downbeat US and Asian sessions as expectations grew that the Federal Reserve might hike rates as early as next month following hawkish comments by a number of Fed officials and upbeat US data.

At 0845 BST, the benchmark Stoxx Europe 600 index was flat, while Germany’s DAX and France’s CAC 40 were down 0.2%.

At the same time, oil prices edged higher, with West Texas Intermediate up 0.3% to $48.43 a barrel and Brent crude up 0.2% to $49.40.

“European markets have opened softer as investors struggle to find significant reasons to invest and the Federal Reserve becomes the focus of attention yet again. While the odds of a June US rate hike have increased substantially over the past week, the market is arguably still considerably more dovish than any of the recent Fed speakers,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

“Today's release of April's Fed meeting minutes is therefore highly important for investors who will be hoping to get some further insight as to which Fed members are looking to raise rates versus those who remain more cautious.”

Atlanta Fed President Dennis Lockhart and San Francisco Fed President John William said on Tuesday that there could be two or three rate hikes on the cards this year.

Meanwhile, investors were also digesting a downgrade of global equities to ‘neutral’ by Goldman Sachs over a 12-month period on growth and valuation concerns.

“Until we see sustained earnings growth, equities do not look attractive, especially on a risk-adjusted basis. We expect particularly poor returns in dollar terms, with our forecast of a stronger dollar and the prospect of less negative equity/FX correlations,” the bank said.

In corporate news, luxury retailer Burberry was under the cosh after it said full-year profits fell 10%, at the bottom of analysts’ range of estimates.

Shares in Swiss hearing aid maker Sonova tumbled after its full-year results missed analysts’ sales and profit targets.

Brewer SABMiller nudged higher after reporting a 10% drop in revenue for the year in its preliminary results to $19.8bn, though the company did claim 7% organic revenue growth at constant currencies.

AstraZeneca was little changed after announcing that its trial of ovarian cancer drug Lynparza in combination with chemotherapy, compared with paclitaxel chemotherapy alone, did not meet the primary endpoint of overall survival in advanced gastric cancer patients

Novartis was in the black after announcing the departure of its head of pharmaceuticals, David Epstein.

On the macroeconomic calendar, Eurozone inflation figures are due at 1000 BST. In the US, the Federal Open Market Committee minutes are at 1900 BST.