Mixed signs and caution in the European markets

European stock markets continued to trade with mixed signs on Wednesday as investors turned their attention to the latest data on the course of the economy which is expected to be tested in the coming months by the forthcoming European interest rate hikes.

The central banker of Austria and member of the Board. ECB’s Robert Holtzmann told Bloomberg that the lack of “decisive action” now runs the risk of requiring tougher measures later, which would trigger a recession.

In this context, he said, “an increase of 50 basis points would send the necessary and clear message that the ECB is moving seriously in the fight against inflation.”

The data released yesterday showed that inflation in the Eurozone climbed to a new record at 8.1% in May, exceeding analysts’ estimates. This was the seventh consecutive record high for inflation, with the ECB preparing for a historic policy shift by raising interest rates year-on-year to curb prices.

On the board, the Stoxx Europe 600 recorded small losses of 0.2% at 442.62 points. The pan-European index closed in May with total losses of 0.85%.

The German DAX gained 0.35% to 14,439.04 points, the French CAC 40 strengthened 0.2% to 6,479.20 points, while the British FTSE 100 lost 0.1% to 7,602.63 points.

In the periphery, the Italian FTSE MIB gained 0.1%, while the Spanish IBEX 35 fell 0.2%.

At the macro level of the day, manufacturing activity in the Eurozone slowed down further in May, with new orders falling for the first time since June 2020, according to data released today by S&P Global.

In particular, S&P Global’s PMI manufacturing index fell to an 18-month low in May to 54.6 from 55.5 in April.

At the same time, the unemployment rate remained at 6.8% in April, unchanged from March, while a year earlier it was at 8.2%, as announced by the European Statistical Office.