Mixed signs in European markets in the shadow of inflation

The main European stock markets are moving with mixed signs on Thursday, with investors waiting for the European Commission’s new forecasts for the Eurozone economy, while also trying to digest the data on the jump in inflation in the US announced yesterday.

European shares closed lower on Wednesday as investors reacted to a higher-than-expected rise in US inflation. The consumer price index, a broad measure of everyday goods and services, rose 9.1 percent in June from a year earlier, well ahead of estimates for an 8.8 percent rise.

The measure marked another month in which U.S. inflation ran at its fastest pace since December 1981. Excluding volatile food and energy prices, the so-called core CPI rose 5.9 percent, compared with an estimate for 5, 7%.

The disappointing data is expected to prompt the Federal Reserve to raise interest rates by another 75 basis points at its meeting later this month, or as much as 1% to tame prices, after +0.75% in June, which was the Fed’s most aggressive hike since 1994, lifting US interest rates to a range of 1.5%-1.75%.

Investors, however, are also waiting for the Commission’s new forecasts for the economy in the Eurozone, which will be announced later today. According to the draft report cited by Bloomberg, the Commission expects GDP to rise 2.6% this year and 1.4% in 2023 – a softer pace than the one forecast in May for a rise of 2.7% and 2 .3% respectively.

Inflation, already at record levels, more than four times the European Central Bank’s 2% target, is now expected to reach 7.6% in 2022 and 4% next year, up from 6 .1% and 2.7% previously estimated by the European Commission.

This development, combined with the recent weakening of the euro, which yesterday lost absolute parity with the dollar for the first time in 20 years, is raising fears that the ECB may go ahead with a further increase in interest rates next week, from 0 .25% which has been declared by the head of Christine Lagarde.

Amid this climate the pan-European Stoxx 600 index kine;itai 0.11% lower at 412.58 points, with most sectors in negative territory, apart from the auto and travel and leisure sectors providing some support.

In Frankfurt the Dax index moved 0.17% higher at 12,777.83 points, while in Paris the CAC 40 fell slightly by 0.09% at 5,994.78 points. Mild losses also for the FTSE 100 in London, which loses 0.12% and moves to 7,147.80 points.

In the Eurozone, the IBEX 35 index in Madrid is down 0.33% at 7,918.90 points, while the worst picture is presented by the FTSE MIB index in Milan, which is down 0.84% ​​at 21,108.00 points, also affected by the political situation in the country.

It is noted that the government of the neighboring country is facing the risk of collapse, as today the Italian Senate is to hold a vote of confidence in the coalition government of Prime Minister Mario Draghi, in which the head of the 5 Star Movement has declared that he will not participate.