European stocks experienced a slight decline on Wednesday as investors closely monitored recent political developments and responded to hawkish remarks from the Federal Reserve.
Despite persistent concerns over France's debt trajectory and fiscal health, the risk premium on French bonds remained stable. National Rally leader Jordan Bardella announced that he would not accept the position of prime minister unless his party achieves a decisive victory in France's upcoming snap election. Current polls suggest that Marine Le Pen's party is poised to become the largest faction in the National Assembly, although it is predicted to fall short of an outright majority.
The pan-European STOXX 600 edged down to 514.53 after gaining 0.7 percent on Tuesday. Meanwhile, the German DAX, France's CAC 40, and the U.K.'s FTSE 100 each fell by 0.2 to 0.4 percent.
The U.S. dollar remained steady following comments from several Federal Reserve officials advocating patience on interest rate cuts. In contrast, the British pound gained ground after data revealed that U.K. inflation had reached the 2 percent target for the first time in three years, offering a boost to Prime Minister Rishi Sunak ahead of the parliamentary elections.
Figures from the Office for National Statistics showed that consumer price inflation eased to 2.0 percent in May, down from 2.3 percent in April, as anticipated. Ruth Gregory, an economist at Capital Economics, remarked that the dip in inflation to 2.0 percent is unlikely to persuade the Bank of England (BoE) to lower the interest rate from the current 5.25 percent.
The BoE has maintained an unchanged interest rate for the past six consecutive meetings, with the current rate marking the highest level since early 2008.
In corporate developments, British precision instrumentation and controls company Spectris saw its shares plunge by 8.5 percent after issuing a profit warning. Meanwhile, Games Workshop, the maker of Warhammer, surged by 8.4 percent following an announcement of anticipated continued revenue and profit growth for the year. Additionally, Vodafone's shares rose by 1.3 percent after the telecommunications group sold an 18 percent stake in Indus Towers to repay debt.
