European stocks made slim gains on Wednesday, with the dollar strengthening as investors fretted over soaring inflation. And also the hit on global growth from looming interest rate rises. Europe’s STOXX 600 index (.STOXX) added 0.3%, with bourses in London (.FTSE) and Paris (.FCHI) climbing 0.2% and 0.4% respectively. Banks (.SX7P) and auto (.SXAP) stocks gained, though data showed German retail sales fell by more than expected in April as consumers feel the pinch of higher prices.
Recently, soaring food and energy costs drove euro zone inflation to a record-high 8.1%. Stoking concern about rate rises not just in Europe but globally. The Bank of Canada is the latest central bank set to hike interest rates, with economists expecting an increase to 1.5% from 1.0% later on Wednesday.
Market players were watching whether attempts to douse inflation by central banks across the world with the tighter monetary policy would spark recessions something that could see rate hikes slow.”It’s just an incredibly uncertain environment at the moment,” said Mike Bell, a global market strategist at J.P. Morgan Asset Management. “In times like that, it makes sense just to moderate the size of one’s risk positions.”
However, investors were also concerned, Bell said, about whether a European Union agreement on an embargo on Russian crude oil imports would see retaliation from Moscow. The ban aims to halt 90% of Russia’s crude imports into the 27-nation bloc by year-end.
Traders expect it will raise rates by 50 bps at meetings this month and they are unsure and increasingly worried about after that.
In commodity markets, oil prices inched higher after the EU agreement on a partial and phased ban on Russian oil and, as Shanghai’s COVID-19 lockdown ended. Brent crude futures were up 0.3% at $115.95 a barrel.
-Reuters.
