Get 40% Off
😲 Missed the +20.8% surge in our stock strategy last month? Not again! Get premium insightsGet 40% Off

European Stocks Edge Lower; Soaring U.K. Inflation Weighs

Published 18/05/2022, 09:22
Updated 18/05/2022, 09:22
© Reuters.

© Reuters.

By Peter Nurse

Investing.com - European stock markets edged lower Wednesday, struggling to maintain the week’s positive momentum as surging U.K. inflation raised concerns about interest rate rises and slowing growth.

By 4 AM ET (0800 GMT), the DAX in Germany traded 0.1% lower, the CAC 40 in France fell 0.1%, and the U.K.’s FTSE 100 dropped 0.1%.

Data out of the U.K. early Wednesday showed consumer inflation hitting a 40-year high, climbing 9.0% on the year in April, gaining 2.5% on the month, the biggest monthly increase since 1991.

These hefty gains were largely expected, as the cap on household electricity and gas prices was adjusted to reflect the sharp rise in wholesale prices caused by Russia's invasion of Ukraine, but suggest that the Bank of England will have to continue tightening monetary policy even though the risk of recession is mounting.

Deputy Governor Dave Ramsden said last week that the central bank will have to raise interest rates further to control surging prices, and there’s a risk that the U.K.’s worst inflation crisis in decades will take longer to ease fully.

Similar data from the Eurozone is due later in the session and is expected to show CPI at 7.5% in April, increasing the likelihood of the European Central Bank hiking rates by 25 basis points in the summer.

European Central Bank Governing Council member Klaas Knot, on Tuesday, became the first Eurozone official to suggest a possible half-point interest rate hike if inflation risks worsen, though he backs a smaller move for now.

In the corporate sector, ABN AMRO (AS:ABNd) stock fell 9% after the Dutch bank warned the war in Ukraine could have an impact on its business even though its first quarter net profit came in above market expectations.

Premier Foods (LON:PFD) stock rose 5.8% after the food manufacturer beat expectations for its annual profit and lifted dividends by 20%, saying it plans to raise prices to combat soaring costs.

Siemens Gamesa (BME:SGREN) stock rose 11% after Siemens Energy (ETR:ENR1n) confirmed it’s preparing a bid to buy the remaining third of the Spanish-listed wind turbine maker it does not already own.

Oil prices traded higher Wednesday on hopes that China is finally getting to grips with a prolonged COVID-19 outbreak, potentially increasing demand from the world’s largest importer of crude.

Shanghai, China’s main financial hub, achieved its milestone of three consecutive days with no new COVID-19 cases outside quarantine zones on Tuesday and laid out plans to end a more than six-week lockdown.

U.S. crude oil inventories unexpectedly fell by 2.4 million barrels for the week ended May 17, according to data from the industry body American Petroleum Institute.

Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day, for confirmation.

By 4 AM ET, U.S. crude futures traded 1.6% higher at $111.39 a barrel, while the Brent contract rose 1.2% to $113.26.

Additionally, gold futures fell 0.3% to $1,814.15/oz, while EUR/USD traded 0.3% lower at 1.0515.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.