European equity markets erased earlier gains and slid lower on Wednesday as investors remain cautious ahead of the US FOMC meeting, while heavy losses on Wall Street set a bearish tone in the afternoon session for equities and commodities. CAC, DAX and London’s equity benchmark retreated sharply between 0.43% and 0.75% as it seems that the recent rally in the global equity markets has started to fade.
The robust economic data from the UK and Germany provided initial support to the European equity markets early in the session, but the momentum changed as investors were prompted to a sell-off ahead of the Fed announcement at 7pm UK time. Nationwide house prices increased by 0.7% in January, beating expectations, while the yearly increase rose to 8.8% versus estimates of 8.5%. Furthermore, the German consumer sentiment also increased to 8.2 for February against estimates of a modest 7.6, showing the economic prospects in Germany have improved.
In commodities, base metals prices extended losses today tracking the downside trend in the equity markets. LME Copper slid lower to retest $7125 level, while Zinc and Nickel retreated to breach $2000 and $14000 levels, respectively. Due to the on-going uncertainty in Ukraine, South Africa and Turkey, investors would like to lock in recent gains, while also remaining cautious ahead of the FOMC meeting.
Tomorrow, market participants will be watching the release of the weekly US jobless claims figures as well as the GDP result for Q4 2013 and pending home sales. In the Eurozone, German CPI inflation data and unemployment figure as well as Eurozone’s consumer sentiment will draw investors’ attention.