European stocks close higher, on a volatile journey and with Truss exit in focus

European stock markets recorded gains, this Thursday (20), in a volatile session. The resignation of UK Prime Minister Liz Truss was in focus, with an initial negative reaction in London, but the indexes later firmed in positive territory, amid assessments of the next chapters in British politics and their effects on the economy. .

The pan-European Stoxx 600 index closed up 0.26% at 398.77 points.

The European opening was mostly negative, amplifying losses from the previous trading session, when the continent’s still strong inflation weighed on sentiment. On Thursday, inflation remained the focus, with data from Germany, but politics were in the foreground.

Liz Truss confirmed her resignation from the position of leader of the Conservative Party, consequently losing the command of the government of the United Kingdom. She said that she will remain in office until her acronym chooses her successor and informed that a new internal election should be finalized next week.

Eurasia sees former finance minister Rishi Sunak as the favorite for the post, with a 35% chance, but with former candidate for office Peny Mourdant close behind at 30%. The consultancy predicts a tough dispute, but also believes there is a rush among conservatives to resolve the matter.

From a markets perspective, the deVere Group believes the prime minister’s departure should raise fears. The consultancy believes in a rally of relief, but “short-lived as political unrest remains”. Capital Economics, in turn, said that a next prime minister would have to tighten fiscal plans, to show restraint to the markets, which could cause a “deeper” recession in the United Kingdom.

On the agenda of indicators for the region, the producer price index (PPI) in Germany increased by 45.8% in September, in the annual comparison, the maximum since the beginning of the historical series, in 1949. monthly increase was 2.3% in September compared to August, less than the 7.9% advance in the previous month.

In this context, NatWest says it expects a 75 basis point hike in interest rates next week by the European Central Bank (ECB), and the bank also projects increases of 50 basis points in December and 25 basis points in early 2023. .

• On the London Stock Exchange, the initial reaction to the exit of Truss was a downturn, but there was a recovery later on. The FTSE 100 index closed up 0.27% at 6,943.91 points.
• In Frankfurt, the DAX index rose 0.20% to 12,767.41 points.
• On the Paris Stock Exchange, the CAC 40 index advanced 0.76% to 6,086.90 points.
• The FTSE MIB index, on the Milan Stock Exchange, registered a gain of 1.07%, at 21,701.50 points.
• In Madrid, the IBEX 35 index rose 0.80% to 7,644.40 points.
• On the Lisbon Stock Exchange, the PSI 20 advanced 0.74%, to 5,466.48 points.