European stocks try to rebound ahead of US CPI
Majority of rises in European stocks before the publication of the US April CPI. The Dax rose 0.08% and the FTSE 100, 0.27%, and the FTSE Mib, 0.20%; while Cac 40 yields 0.06%. The Euro Stoxx 50 is up 0.03%.
Forecasts point to a 3.6% year-on-year increase for US inflation, a sharp acceleration from the 2.6% growth rate reached in March.
In addition, the year-on-year growth of its underlying is also expected to easily exceed 2%, to stand at 2.3% (1.6% in March). Readings higher than expected by analysts would raise the tension in the western equity and fixed income markets, causing further declines in them.
“There is a lot of fear as to what the US CPI might show this afternoon, so we see it unlikely that, until its release, there will be any attempt to rebound in European equity markets,” said Link Securities analysts.
In Europe, the April CPIs for France and Germany have already been known.
The final consumer price index for Aprilâ ???? in France it rose 1.6â ????% â ???? â ???? â ???? â ???? â ???? â ???? â ???? â ?? ??to???? in year-on-year and harmonized terms for comparison with the rest of the EU, the INSEE, the country’s official statistics institute, said on Wednesday.
The provisional estimate for the harmonized year-on-year data for Marchâ ???? had shown an increase of 1.7% â ???? â ???? â ???? â ????. A Reuters poll suggested that the annual inflation rate would rise 1.7% â ???? â ???? in April.â ????
Germany’s consumer price index, harmonized for comparison with other European countries (IPCA), rose 2.1â ????% â ???? â ???? â ???? â ???? â ???? â ???? â ???? â ???? â ???? in year-on-year terms in the final reading for April, the Federal Statistical Office said on Wednesdayâ ????. The interim report showed a reading of + 2.1â ???? â ???? â ????% â ???? â ???? and a Reuters poll had also predicted that the IPCA would rise 2.1% â ???? â ???? â ???? â ???? â ???? in April.
In month-on-month terms, the IPCA rose 0.5â ????% â ???? â ???? â ???? â ???? â ???? â ???? â ??? ? â ???? â ????, identical variation to that experienced in the provisional dataâ ???? â ???? â ???? â ????. A Reuters poll suggested that the monthly figure would rise 0.5% â ???? â ???? in Aprilâ ????.
On the other hand, the British economy grew by 2.1â ???? â ????% â ???? â ???? â ???? â ???? â ???? â ?? ?? â ???? â ???? â ???? â ???? â ???? â ???? â ???? â ???? â ???? in Marchâ ???? compared to the previous month. In the last three months (up to the end of March), the UK’s gross domestic product (GDP) â ???? â ???? â ???? â ???? â ???? â? ??? fell by 1.5â ????% qoqâ ???? â ???? â ???? â ???? â ???? â ????, above forecastâ ????.
Compared to the same quarter of the previous year, the British economy â ???? â ???? grew by 1.4â ????% â ???? â ???? â ???? â? ??? â ???? â ???? â ???? â ????, after the â ???? data for the previous quarter showed a growth of -7.8% â ??? ?
Falls in Europe and Wall Street due to inflation fears
The fear of “inflation” yesterday caused sharp falls in the European and US equity markets, declines that also occurred in the bond markets, which, in turn, drove the yields of these assets higher.
The strong increase experienced by the producer price index (PPI) in China in April, an increase caused by the sharp rise in raw material prices, caused strong tensions in both Asian stock markets, which closed with significant declines, such as in the European stock markets, whose main indices opened lower and remained so throughout the day, ending with declines close to 2%.
Pending inflation data in the US, Wall Street closed yesterday with general losses. The Dow Jones fell 1.36% and the selective S&P 500 fell 0.87%. The Nasdaq, on which the main technology companies are listed, was almost flat after recording notable losses in the morning, down 0.09%
The New York stock market is going through a volatile week with marked sales in large technology stocks, which analysts consider a return to market rotation due to expectations of an increase in inflation.
The Federal Reserve has maintained that it is far from its inflation and employment targets, that there are still risks and that therefore it will maintain its supportive policies, but investors are awaiting its reaction to tomorrow’s inflation report.
As indicated by several members of the US Federal Reserve Open Committee (FOMC), it is still too early to talk about the withdrawal of stimulus, while the central bank is focused on results, rather than perspectives. In addition, they continued to indicate that inflationary pressures are temporary and stem from the economic reopening and supply chain issues. If inflation becomes a problem, they reiterated that they have the tools to fix it.
Additionally, they seem to focus more on the lack of qualifications, fears of the virus and domestic needs as obstacles to the supply of the labor market, than on the increase that has occurred in unemployment benefits. FOMC members also stressed that they expect improvements in the “momentum” of the US labor market in the short term.
The governor of the Bank of France and member of the Governing Council of the European Central Bank (ECB), Villeroy, said yesterday that any suggestion that the central bank will begin to reduce its purchases of bonds in the secondary markets is mere speculation. In addition, Villeroy pointed out that, even if the ECB loosen in its pandemic emergency purchase program (PEPP), the entity’s monetary policy would continue to be accommodative.
For her part, the member of the Executive Council of the ECB, the German Schnabel, said that inflation could exceed 3% in Germany this year but that the ECB should consider this fact as transitory so it will not adjust its policies in response to it. .
The euro gives way against the dollar and is exchanged for 1,213 greenbacks.
In the commodity market, oil prices go up. The Brent oil of reference in Europe rises 0.63%, to 68.97 dollars per barrel, while the West Texas of the United States is revalued by 0.66%, up to 65.71 dollars.