European stock markets continued to trade lower on Wednesday, although they opened higher in a bid to bounce back after three sessions of heavy losses, with concerns about risks to growth from interest rate hikes on both sides of the Atlantic burden the climate even today.
The message that central bankers in Europe and the US are now trying to send is that their priority is to fight inflation, despite the risks to growth from successive interest rate hikes. The global tightening of monetary policy, with central banks making their biggest interest rate hikes in several decades, has fueled serious concerns about the outlook for global growth, sending shockwaves through global stock markets.
In Europe, investors are bracing for a rate hike of as much as 75 basis points at the European Central Bank’s next meeting in September, following consecutive record inflation. The annual index climbed to 8.1% in May, 8.6% in June and 8.9% in July, drawing momentum from an unprecedented rally in energy prices.
On the board, the pan-European STOXX 600 is down 0.35% at 418.32 points.
Germany’s DAX edged down 0.3% to 12,924.40, while France’s CAC 40 lost 0.5% to 6,180.20 after data showed inflation slowed in August.
In particular, harmonized inflation according to initial data announced by the French statistics agency reached 6.5% in August, slowing from 6.8% in July and lower than analysts’ estimate of 6.7% in a Reuters poll.
In a separate statement, the statistics office confirmed an initial reading that saw France’s GDP grow by 0.5% in the second quarter.
Britain’s FTSE 100 is down 0.4%. Elsewhere, Italy’s FTSE MIB edged up 0.1%, while Spain’s IBEX 35 fell 0.25%.
Meanwhile, energy insecurity is on the rise in Europe as Russia’s Gazprom today halted natural gas flows through Nord Stream 1 to carry out maintenance work on the pipeline. The outage is expected to last three days, but senior European officials have publicly expressed concern that flows may not be restored.
Source: Capital
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