European Stocks Largely Lower; Concerns Mount Over Eurozone CPI Release
2022.05.31 11:21
By Peter Nurse
Investing.com – European stock markets traded in a cautious manner Tuesday, ahead of the release of key Eurozone inflation data which could heighten concerns about the pace and scale of looming interest rate hikes.
By 3:45 AM ET (0745 GMT), the DAX in Germany traded 0.7% lower, the CAC 40 in France fell 0.9%, while the U.K.’s FTSE 100 outperformed, climbing 0.2%.
French inflation rose more than expected in May, with data released earlier Tuesday showing consumer prices rose 0.7% in May for a new record 12-month inflation rate of 5.8%, up from 5.4% in April.
Economic numbers released on Monday showed German inflation hit another all-time high while numbers from Spain also topped estimates.
This puts the focus on the latest Eurozone inflation flash estimate, at 5 AM ET (0900 GMT), with economists expecting the consumer price index to hit another record high of 7.7% in May, up from 7.4% in April.
This data arrives just over a week before a crucial European Central Bank meeting where officials are set to announce the conclusion of large-scale asset purchases and confirm plans to raise interest rates in July for the first time in more than a decade.
ECB President Christine Lagarde indicated last week that the central bank’s deposit rate should start rising in July, and a hefty rise in Eurozone CPI could strengthen the case for an outsized interest rate hike.
Earlier in the day, data showed that China’s factory activity fell at a slower pace in May as COVID-19 curbs in major manufacturing hubs eased, with the official manufacturing purchasing managers’ index rising to 49.6 in May from 47.4 in April.
In corporate news, Unilever (LON:ULVR) was in the spotlight after the consumer giant said it had appointed US-based activist investor Nelson Peltz as a non-executive director.
Its stock soared over 7% as the move represents a big concession to outside shareholders who have long pressed for more outside influence on its strategy after suffering years of relative underperformance.
On the flip side, SAS (ST:SAS) stock fell almost 7% after the Scandinavian airline announced plans to raise 9.5 billion Swedish crowns ($967 million) in new cash, warning of liquidity problems if it falls short.
Oil prices extended gains Tuesday, recording new two-month highs after the European Union agreed to substantially reduce oil imports from Russia, tightening an already strained crude market.
The EU agreed in principle late Monday to cut 90% of oil imports from Russia by the end of 2022, managing to resolve a deadlock with Hungary over the bloc’s toughest sanction yet on Russia over its invasion of Ukraine.
By 3:45 AM ET, U.S. crude futures traded 1.3% higher at $118.79 a barrel, while the Brent contract rose 1.7% to $119.56.
Additionally, gold futures rose 0.1% to $1,857.60/oz, while EUR/USD traded 0.4% lower at 1.0739.
