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European equities lower due to inflation concerns

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European equities fell on Wednesday, led by technology stocks, as concerns about inflation and tightening monetary policy dampened optimism about China’s economic recovery.

The pan-European STOXX 600 index fell 0.1% against 0820 GMT after rising 3.6% since Friday.

Technology stocks were down 0.7%, while a drop in copper price weighed on commodity inventories.

Data from Wednesday showed that UK consumer price inflation reached 9% in April, its all-time high, and came closer to the Bank of England’s forecast of more than 10% later this year.

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“Recession concerns rose again after UK inflation rose to its highest level in 40 years,” said Susannah Streeter, senior investment and market analyst at Hargreaves Landsdown.

Investors expect the central bank to supplement the four rate hikes it has implemented since December to contain inflation.

The European Central Bank is set to raise interest rates in July, and the US Federal Reserve has also embraced the policy tightening, casting doubt on its impact on global economic growth.

“Many companies have been able to pass on high costs to customers, keeping margins resilient. But there are still concerns about how long consumers will continue to pay the price,” Streeter said.

Shares rose on Tuesday amid declining COVID-19 cases in China, raising hopes of increased economic activity and demand from the world’s second-largest economy.

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The STOXX 600 is on track to finish lower in May, with no significant gains until March of this year. But with a 10% drop to date, the index still outperformed the S&P 500 and MSCI’s All Country index, which fell more than 14% over the same period.

In earnings, Euronext rose 4.7% from record quarterly revenue. Dutch bank ABN Amro beat earnings estimates, but shares fell 9.3% as it warned of the consequences of the war in Ukraine.

Siemens Gamesa rose 11.2% after sources said Siemens Energy is preparing to buy its remaining stake in the wind turbine maker. The stake is currently worth 3.14 billion euros (3.31 billion dollars).

Germany’s Commerzbank AG rose 1.4% after a report that it had planned merger talks with Italy’s UniCredit SpA before the potential deal was shelved due to the war in Ukraine. UniCredit shares were unchanged.

Holiday group TUI fell 11.4% after it announced a share sale to repay elements of a German state aid it received during the pandemic. (Reporting by Susan Mathew in Bengaluru; editing by Rashmi Aich)

This post European equities lower due to inflation concerns

was original published at “https://financialpost.com/pmn/business-pmn/european-shares-inch-lower-on-inflation-worries”

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