By Sruthi Shankar

(Reuters] European stocks fell Wednesday on the back of disappointing earnings, nerves and nerves before the U.S. Federal Reserve’s policy decision. It is expected that the Fed will raise interest rates at the highest level since 2000 in order to curb inflation.

Pan-European Index fell 0.5% during morning trade. Many regional indexes were also in negative territory.

Europe’s retail sector suffered the most, with Boohoo.com, a British online fashion retailer plunging 13% following freight cost inflation that led to 28% drop in core annual earnings.

Pandora (OTC-:) dropped 1.7% as the Danish jewellery manufacturer raised concerns about its earnings for full year.

Skanska, the Swedish builder, fell 10.4% after posting a decline in profits and braced itself for possible cancellations of projects in its Eastern European market as an indirect result of the war in Ukraine.

The mood was positive for the U.S. central banking’s decision to hike interest rates 50 basis points, and to announce reductions in its balance sheet of $9 trillion.

Traders are looking to find clues about how far they can go, amid increasing concerns over China’s COVID-19 lockdowns and rapid inflation.

David Madden (market analyst at Equiti Capital) stated that once they have the hike over they will use a commentary that is a little more hawkish, but not excessively so.

It is not possible to have an environment where the cost of living is eating into savings and you are changing monetary policy.

Also, traders were increasing their expectations for rate hikes by the European Central Bank. The bank has been taking out stimulus at the slowest speed this year. However, an increase in inflation puts pressure on policymakers. [GVD/EUR]

The first-quarter earnings outlook in Europe is still rising. According to Refinitiv IBES data analysts are expecting a 35.4% growth in profits for STOXX600 companies. That’s up from last week’s forecast of a 27.1% increase.

Equinor Norway climbed 1.6% after reporting a record quarter-end pretax profit. This was due to the Ukraine conflict which caused an unprecedented energy shortage that sent the prices skyrocketing.

The rise in crude oil prices and rising oil and gas stocks led to an increase of 1.2% in oil and natural gas stocks. In turn, the European Union (the largest trade bloc on the planet) announced plans for phasing out Russian imports. [O/R]