The main European indices ended their trading with strong losses, as concerns about the new inflationary jump in the US were added to the possibility of anarchy in Italy, which threw up the spreads of the third largest economy of the eurozone, while the Commission estimates that price pressures will be maintained .
In particular, the pan-European Stoxx 600 index closed down 1.5% at 406.5 points, with most of its sectors in negative territory, excluding the travel and leisure sector.
A similar movement was followed by the Stoxx 50 of high capitalization, which recorded losses of 1.7% closing at 3,395 points, while as mentioned above the big loser of the day was the Italian FTSE MIB which “limited” its plunge to 3.44% by sliding to 20,554 units affected by the political situation in the country.
The government of the neighboring country is facing the risk of collapse, as the coalition government of Prime Minister Mario Draghi received a vote of confidence in the afternoon, but without the support of the 5 Star Movement, which abstained from the process.
As reported by Italian media, the Italian prime minister has moved to the president of the Republic Mattarella, with rumors stating that he will submit his resignation to him, while during the day the spread – the deviation of the yield of the 10-year bond from the corresponding German – had reached up to 220 units (2.2%).
Elsewhere, in Frankfurt the DAX also came under heavy pressure and closed 1.86% lower at 12,519 points, as did the CAC 40 in Paris which fell 1.4% to 5,915 points.
The FTSE 100 in London lost 1.6% to end at 7,039 points, while in the Eurozone Spain’s IBEX 35 fell 1.7%% to 7,804 points.
European shares had also moved lower yesterday, Wednesday, after 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 push the Federal Reserve to raise interest rates by as much as 1% to tame prices, after June’s +0.75% hike, which was the Fed’s most aggressive hike since 1994.
Investors are also evaluating the Commission’s new forecasts for the economy in the Eurozone, which proceeded with a marginal downgrading of growth to 2.6% from 2.7% predicted in May, while for the EU as a whole the forecast for 2, 7% remained unchanged.
In the size of inflation, there is a revision to 7.6% from 6.8% predicted in May for the Eurozone, while for the EU to 8.3% from 8.4% predicted in May.
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 bigger increase in interest rates next week, from 0 .25% which has been declared by the head of Christine Lagarde.
Source: Capital
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