In negative territory but far from the lows of the day, the main European indices ended their trading, with investors evaluating the data after the new inflation jump in the US.
In particular, the pan-European Stoxx 600 index closed with losses of 1% that brought it to 412.8 points, having recovered to some extent from the low of 409.3 points where it fell after the announcement of the shock inflation of 9.1% in the US in June.
Major support for the index came from Orion, which rallied more than 9%, after the Finnish pharmaceutical raised its outlook for the year in the wake of the collaboration agreement it signed with Merck to develop a new drug for prostate cancer.
On the rest of the boards, a similar move was generally followed by the high-cap Stoxx 50 with a fall of 0.95% to 3,453 points, while in the national markets the German DAX limited its losses to 1.16% closing at 12,756 points, the French CAC lost 0.73% falling to 6,000 points, as did the British FTSE 100 which closed at 7,156 points with -0.74%.
The markets of the region also moved at the same pace, where in Italy the FTSE MIB ended with a fall of 0.9% at 21,286 points, while in Spain the IBEX 35 lost 0.87% closing at 7,944 points.
Investors’ eyes predictably turned to the other side of the Atlantic where data showed that the cost of living in the US continued to rise rapidly, with the Consumer Price Index to run at a beastly rate of 9.1% in June having far exceeded the forecasts and recording for another month a new record of 40 years.
It is characteristic that analysts’ estimates expected the index to show an acceleration, albeit a significantly milder one at 8.8%.
Similarly, the structural measure of the index, which excludes volatile food and energy prices, also jumped sharply to 5.9% when forecasts expected it to move to 5.5%.
The new reading has made it all but certain that the Federal Reserve will raise interest rates by another 75 basis points at the upcoming meeting this month, while the market has now started to price in the possibility of a mammoth 100bp hike.
At the same time, the center of interest was also found eurowhich fell today for the first time in nearly two decades below par against the dollaras fears of aggressive monetary policy tightening and growing concerns about an impending recession in the eurozone continued to weigh on the common European currency.
Elsewhere in corporate news, French electricity group EDF requested a trading halt in its shares amid plans to nationalize it. The French government is willing to pay more than 8 billion euros to bring the energy giant back under full state control.
Sta macroeconomic data of the day, Eurozone industrial production posted a bigger-than-expected increase in May, with the production of capital and non-durable consumer goods as a vehicle. According to Eurostat, industrial production in the 19 euro countries increased by 0.8% on a monthly basis and by 1.6% compared to one before. Estimates had seen a rise of 0.3%.
Finally, at Germany, the annual rate of inflation fell in June due to temporary government interventions. According to final data released by Germany’s statistics agency, consumer prices rose 7.6 percent year-on-year, according to the forecast of economists polled by the Wall Street Journal. In May, consumer prices had risen 7.9%, the highest level since December 1973.
Source: Capital
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