Nervousness in the Euromarkets after the ECB interest rate hike

LAST UPDATE: 15.25

Nervousness continued to prevail in euro markets on Thursday as the European Central Bank (ECB) raised interest rates by 50 basis points. It is noted that this is the first increase in interest rates by the ECB in 11 years, in an attempt to deal with the historic rise in inflation. Meanwhile, the chaos in the Italian political scene is also in focus as the Italian Prime Minister Mario Draghi announced his resignation.

In this climate, the pan-European Stoxx 600 rises 0.01% to 422.55 points while the other pan-European Stoxx 50 earns 0.11%.

In the rest of the board, the German DAX declines by 0.35%, the British FTSE 100 the French also slips by 0.13% CAC-40 increases by 0.29%.

In the periphery, the Spanish IBEX-35 the Italian also registers an increase of 0.70% FTSE MIBpreviously losing over 2%, is now losing 0.64%.

With rising prices an ever-increasing concern for households, companies and governments in the eurozone, the ECB raised interest rates in a bid to rein in inflation. The ECB’s decision comes at a time of slowing growth amid the war in Ukraine and threats to energy supplies.

Meanwhile, Italy has been plunged into fresh political uncertainty as Draghi told parliament on Thursday he would step down, paving the way for new elections, after some ruling coalition parties abstained from yesterday’s confidence vote. Draghi won the vote, but many senators refused to participate, bringing the government to the brink of collapse. Snap elections could now be held in September or October.

On the issue of energy supplies to the region, Russia began sending natural gas through its largest pipeline to Europe after the end of a 10-day period of maintenance work, Bloomberg reported.

Price hikes continue to hit the region. On Wednesday, data from the United Kingdom showed inflation hit yet another new 40-year high in June as food and energy prices continued to rise, escalating the country’s historic cost-of-living crisis.

In today’s macros, sentiment in the French manufacturing sector worsened in July amid rising energy prices and uncertainty stemming from the war in Ukraine. French manufacturing sentiment stood at 106 on a monthly basis, down from 108 in June, according to statistics agency Insee. Economists had expected it to be 106.5 points.