European stock market in red zone due to rising inflation
2023.01.30 14:01
European stock market in red zone due to rising inflation
By Ray Johnson
Budrigannews.com – As investors prepare for a slew of interest rate hikes from prominent central banks later in the week, European shares fell on Monday due to hotter-than-anticipated inflation data from Spain.
Money market bets indicate that the Federal Reserve of the United States will raise its policy rate by 25 basis points (bps) on Wednesday to 4.50 percent to 4.75 percent, while the European Central Bank (ECB) and the Bank of England (BoE) will each raise rates by 50 bps on Thursday to 2.50 percent and 4.0 percent, respectively.
After preliminary data revealed that Spain’s consumer prices increased by 5.8% in January, which was higher than anticipated, bond yields in the Eurozone increased.
According to Edward Moya, a senior market analyst at OANDA, “What surprised some people was that in Spain, we had the first acceleration with the annual pace in six months” and “that is likely to keep the pressure elevated for the ECB to remain aggressive with their rate hikes.”
It is evidently a mode of waiting and seeing. Markets will continue to be alarmed by higher inflation.
With chip stocks ASM International (OTC:), Europe’s technology index fell the most among STOXX 600 sectors by 1.7%. Nordic Semiconductor and N.V. are two of the companies that suffered the most.
Unilever, a consumer goods conglomerate with headquarters in the UK and trading on the New York Stock Exchange (NYSE:) increased by 1.3 percent following the announcement of a new CEO.
After the Dutch health technology company announced that it will eliminate an additional 6,000 jobs, Philips saw a 7 percent increase, benefiting the overall healthcare industry.
A sign that Europe’s largest economy may be entering a much-anticipated recession as a result of the Ukraine war is the unexpected decline in the German economy in the fourth quarter.
According to Eurostat’s announcement on Monday, crucial inflation data for the euro zone that are due a day before the ECB meeting will only include an estimate for Germany because the largest country in the bloc has delayed the release of its own data.
After losing nearly 13% in 2022, optimism regarding better-than-expected corporate earnings and economic resilience has put the STOXX 600 index on track for a monthly gain of nearly 7%.
Refinitiv data indicated that earnings for STOXX 600 companies have likely increased by around 10% in the fourth quarter, down from 14.5% at the beginning of January.
After the German company that makes renewable energy said that Morgan Stanley (NYSE:) is no longer trying to sell a stake.
