Record high inflation pushes eurozone shares to session lows

The German share value index DAX graph is pictured on the inventory alternate in Frankfurt, Germany, Might 30, 2022. REUTERS/Employees

Might 31 (Reuters) – Eurozone shares hit session lows on Tuesday after information confirmed inflation rose to a document excessive in Might, spurring bets of larger rate of interest hikes by the European Central Financial institution (ECB).

Inflation within the 19 nations sharing the euro accelerated to eight.1% in Might from 7.4% in April, beating expectations for 7.7% as value progress continued to broaden, indicating that it’s not simply power pulling up the headline determine. learn extra

The STOXX index of eurozone shares (.STOXXE) dropped 1.3% and the pan-European STOXX 600 index (.STOXX), flat earlier than the studying, fell 0.7%.

“The eurozone’s excessive inflation studying has prompted shares to reverse course, displaying that buyers are nonetheless very jumpy on the subject of the financial outlook and continued excessive inflation readings,” mentioned Chris Beauchamp, chief market analyst at on-line buying and selling platform IG.

The euro area’s banks (.SX7E), which usually welcome indicators of rising rates of interest, slid 1.6% as buyers apprehensive concerning the hit to the financial system from surging costs.

“That is leading to market expectations of maybe ECB performing extra shortly,” mentioned Bert Colijn, senior economist, eurozone, at ING. Nonetheless, he added that ING nonetheless expects the central financial institution to hike charges by 25 foundation factors in July and September.

Buyers will carefully look ahead to any change within the ECB’s stance after its assembly subsequent week. The central financial institution has to this point signalled that it’ll start its rate of interest climbing cycle in July, with the speed seen rising to 0% or above by September.

The STOXX 600 was set to finish Might down 1.6%, including to sharp losses earlier this yr on issues over central financial institution tightening, fallout from the Ukraine battle and China’s powerful COVID-19 curbs.

Fuelling issues about inflation, Brent crude hit $123 per barrel after Europe vowed to chop most Russian oil imports within the bloc’s hardest sanction on Moscow because the invasion of Ukraine three months in the past. learn extra

Nordic shares (.OBX) hit a document excessive on Tuesday, final up 1% and among the many day’s uncommon outperformers together with London’s FTSE (.FTSE)index.

A 9.4% bounce in client items big Unilever (ULVR.L), lifted British shares, after it named activist investor Nelson Peltz to its board. learn extra

Dutch speciality chemical compounds maker DSM (DSMN.AS) jumped 8.0% on plans to merge with Swiss peer Firmenich. DSM additionally introduced the sale of its engineering supplies subsidiary for 3.85 billion euros ($4.13 billion) to personal fairness agency Introduction Worldwide and German chemical compounds firm Lanxess (LXSG.DE)

Lanxess surged 11.2%.

Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru; Enhancing by Sriraj Kalluvila, Shounak Dasgupta and Jonathan Oatis

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