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Europe Markets Close Lower Ahead of House Vote on U.S. Debt Ceiling; SBB Down 27%

Evelyn Hockstein | Reuters

This is CNBC's live blog covering European markets.

European stock markets closed lower Wednesday as jitters remained over the U.S. debt ceiling bill ahead of the June 5 deadline.

The Stoxx 600 index provisionally ended down over 1.1%, with autos stocks 2.7% lower and chemicals down 2%.

After passing a key procedural vote in the House Rules Committee on Tuesday, the Fiscal Responsibility Act is provisionally scheduled to face a floor vote in the Republican-majority House around 8:30 p.m. ET Wednesday.

It then needs to pass the Democratic-controlled Senate before Monday, when the U.S. Treasury predicts it will not have enough money to meet its debt obligations.

The nonpartisan Congressional Budget Office on Tuesday estimated the bill would see budget deficits "reduced by about $1.5 trillion" over the next decade, in line with party projections — potentially providing it with additional support.

Tech stocks continue to see a boost from excitement around U.S.-listed Nvidia, which briefly hit a $1 trillion market cap on Tuesday following its better than expected results.

Flash figures Wednesday morning showed inflation in France cooled to 6% in May, down from 6.9% in April. Prices were 0.1% lower month on month in the index comparing inflation across the euro zone. The figures were lower than forecast in a Reuters poll of economists.

German inflation data will be out in the afternoon, ahead of a euro zone flash reading on Thursday.

Investors are also assessing data out of China, where the manufacturing purchasing managers' index declined for a second straight month and at a faster rate than expected; and property pricing and transactions "weakened sharply."

Hong Kong's Hang Seng index dropped 2% to a 2023 low, and mainland Chinese and Japanese markets were lower.

"We've had quite a strong run in global equity markets and a lot of that has been in anticipation of stronger earnings. We've had some alleviation on the inflation front and that's given hopes that we might see a pivot coming in by the Fed earlier than expected," Aneeka Gupta, equity and commodity strategist at WisdomTree Europe, told CNBC.

"What's now concerning markets is the ongoing debt ceiling, that seems to be front and center, and that is weighing on sentiment to a great deal. We've also been going quite a lot back and forth on inflation, the data shows inflation is coming off quite clearly but the [Personal Consumption Expenditures] index showing slight increases. That concerns investors the Fed is not done."

U.S. stock futures were lower Wednesday.

— CNBC's Christina Wilkie and Emma Kinery contributed to this report

Oil prices extend losses

Oil prices fell over 2% during afternoon deals, extending losses on weaker-than-expected economic data from China and a stronger U.S. dollar.

International benchmark Brent crude futures were last seen trading down 2.1% at $72.01 a barrel, while U.S. West Texas Intermediate dipped 2.6% to $67.68.

— Sam Meredith

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Stocks on the move: B&M up 6%, SBB down 10%

Shares of discount retailer B&M climbed 6% as the company reported 7.4% lower adjusted core profits in full-year results, but forecast sales and profit growth for 2023-2024.

CEO Alejandro Russo said the company was "actively responding to the short-term pressure on consumers from the cost-of-living crisis, with a relentless focus on price and value."

Embattled Swedish property group SBB, which earlier this week said it was considering strategic options including a partial or whole sale of the business, was yet again at the bottom of Stoxx 600 movements.

Shares were down 10.2% after Ilija Batljan Invest AB, a holding company that says SBB payments are an "important component" of its earnings, said it would pause interest payments on its outstanding hybrid bonds. It comes after SBB suspended its dividend on May 9.

— Jenni Reid

French inflation falls more than forecast

Inflation in France cooled to 6% in May from 6.9% in April, flash figures in the Harmonised Index of Consumer Prices showed, the lowest rate for a year.

Economists polled by Reuters expected inflation of 6.4%.

Prices fell by 0.1% on a monthly basis. Annual inflation cooled across various sectors, with the sharpest drops seen in energy (6.8% to 2%) and food (15% to 14.1%).

Bank of France Governor Francois Villeroy de Galhau said after the print that inflation may have peaked in France, Reuters reported.

— Jenni Reid

Europe stocks lower

European stocks fell Wednesday morning as investors assessed data releases and prepared for a key vote on the U.S. debt ceiling bill.

The Stoxx 600 was down 0.4% at 8:56 a.m. London time, extending Tuesday's losses. Food and beverage stocks fell 1.2%, while telecom and utilities both climbed around 0.2%.

France's CAC 40 shed 0.54%, with the U.K.'s FTSE 100 and Germany's DAX both down 0.38%.

— Jenni Reid

European markets: Here are the opening calls

European markets are heading for a broadly downbeat start to Wednesday's session.

The U.K.'s FTSE 100 index was last seen opening 46.5 points lower at 7,476, according to data from IG.

Germany's DAX is set to open 108.5 points lower at 15,794, France's CAC down 48 points at 7,156 and Italy's FTSE MIB 230 points lower at 26,433.

— Jenni Reid

China's factory activity disappoints

China's official measure of factory activity for May came in at 48.8, below the 50-mark that separates growth from contraction — and missing the 49.4 estimate from a Reuters poll.

A weak read in that manufacturing measure "has been a solid precursor to policy easing," Morgan Stanley analysts said in a May 17 report.

"If growth does not accelerate sufficiently to narrow the output gap, social stability risk may rise and eventually trigger more meaningful stimulus," they said.

The National Bureau of Statistics noted the purchasing managers' index for large manufacturers came in at 50, while that of smaller manufacturers was lower. The index for services activity remained in expansionary territory at 54.5, but marked a second-straight month of decline.

— Evelyn Cheng, Jihye Lee

CNBC Pro: AMD shares jumped last week on the A.I. buzz. Wall Street weighs in on the stock's future

Wall Street is again abuzz over artificial intelligence ever since chipmaker Nvidia reported blowout earnings last week.

Apart from Nvidia, investors have piled into stocks that could benefit from AI. One of them is Advanced Micro Devices.

But what lies ahead for the stock and does it have the potential to surge further?

CNBC Pro subscribers can read more here.

— Weizhen Tan

Oil slides more than 4%

Oil prices were down more than 4% on Tuesday as market observers weighed the likelihood of Congressional approval of the U.S. debt ceiling agreement and looked to the OPEC+ meeting slated for this weekend.

Brent crude dropped $3.28, or 4.3%, to $73.79 a barrel. U.S. West Texas Intermediate crude lost $3.06, or 4.2%, to $69.61.

Energy stocks were the worst performer in S&P 500, down around 1.5% in Tuesday's session. With Wednesday marking the last trading session of the month, the sector is also set to see the worst performance in May with a 9.3% drop so far.

— Alex Harring

Nvidia reaches $1 trillion market cap

Nvidia shares added to a recent string of gains on Tuesday to hit a $1 trillion market cap.

With Tuesday's moves, Nvidia joins an elite club of companies with a $1 trillion market cap or more. That group includes Alphabet, Apple and Microsoft.

Shares gained more than 4% in early morning trading to last trade at around $405.56. Shares need to hold above $404.86 to maintain that distinction during Tuesday's trading.

— Samantha Subin

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