Eurozone markets closed positively on Wednesday amid worries about data showing a “burst” of inflation in China, Germany and the United States, bringing to the fore the possibility that central banks will be forced to tighten their monetary policy more aggressively.
In particular, the pan-European Stoxx 600 recorded an increase of 0.22% to 483.76 points, while the other pan-European Stoxx 50 increased 0.10% to 4,348.82 points.
On the rest of the board, the German DAX gained 0.17% to 16,067.83 points, the British FTSE 100 added 0.91% to 7,340.15 points and the French CAC – 40 closed at 7,045.16 points with an increase of 0.03%.
In the periphery, the Spanish IBEX-35 recorded gains of 0.74% to 9,141.80 points and the Italian FTSE MIB added 0.44% to 27,561 points.
U.S. data showed annual inflation jumped to a 31-year high of 6.2% in October, surpassing analysts’ estimates of an annual increase of 5.9%. On a monthly basis, the price index increased by 0.9%, compared to the analysts’ estimate of 0.6%.
Hussain Mehdi, a senior executive at HSBC Asset Management, said that while the bank expects the period of high inflation to be “temporary”, there is room for short-term inflation to remain “uncomfortably high”.
Earlier, data released in China showed that producer prices climbed to a 26-year high last month.
The data of the German statistical service for October also showed a strong rise in prices. In particular, prices increased by 4.5% on the basis of national standards and by 4.6% on a harmonized basis, according to Destatis.
The rally of inflation in recent months maintains the concern about the “resilience” of central banks to maintain the particularly facilitative direction of their monetary policy. The European Central Bank expects further inflation growth this year, before starting to decline in 2022.
In business developments, the German Infineon lost its initial profits and is currently falling 1.5% in the aftermath of its results for the last quarter. On the other hand, the share of the British Marks & Spencer reacted with an 11% rally after the company announced that it was revising its forecasts for the whole year.
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