By Sagarika Jaisinghani and Shreyashi Sanyal
Jun 23 (.) – European stocks held below record highs on Wednesday as inflation concerns overshadowed data showing a surge in business activity in June, while stocks in luxury goods makers French fell following a downgrade from HSBC.
* The pan-European STOXX 600 index was down 0.7%, with France’s Kering and Hermes falling 3.0% and 1.5%, respectively, as HSBC said the luxury goods market “could take a breather as it really could be for the best. “
* The broader retail index fell 1.3%.
* The French and German stock exchanges were among those that fell the most, despite data showing a boom in service sector activity in June in both countries, following the relaxation of restrictions due to the coronavirus.
* A survey showed that euro zone business growth accelerated in June to its fastest pace in 15 years, as the relaxation of tightening measures unleashed stifled demand and fueled a boom in the dominant sector of the services, but it also led to increased price pressures.
* “The further strengthening of the eurozone composite PMI, which reached its highest level in 15 years in June, underscores that the economy is rebounding rapidly,” said Jack Allen-Reynolds, senior economist for Europe at Capital Economics.
* “However, the strong economic rebound is accompanied by new evidence of intensifying price pressures.”
* The benchmark STOXX 600 index fell back from its all-time highs last week following a surprising tightening of the US Federal Reserve’s tone on inflation and monetary policy.
* Economically sensitive sectors, including banks, mining and energy, have risen again since then, as Fed Chairman Jerome Powell assured markets that the central bank would not raise interest rates too quickly based solely on fears of looming inflation.
(Report by Sagarika Jaisinghani and Shreyashi Sanyal in Bengaluru; Edited in Spanish by Javier López de Lérida)