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European Stocks Sharply Lower; German State Inflation Weighs

Published 09/29/2022, 03:46 AM
Updated 09/29/2022, 03:47 AM
© Reuters.

By Peter Nurse

Investing.com - European stock markets weakened Thursday as surging German inflation increased concerns of more aggressive monetary policy tightening, while the boost from the Bank of England’s invention faded.

By 03:45 ET (07:45 GMT), the DAX in Germany traded 1.7% lower, the CAC 40 in France fell 1.7%, and U.K.’s FTSE 100 dropped 2.2%.

Investors have been rattled in recent weeks by soaring bond yields, as central bankers raised interest rates substantially to contain red-hot inflation, potentially tipping the global economy into recession.

The European Central Bank has increased its benchmark interest rate by a combined 125 basis points over its last two meetings, and more hikes look likely after inflation in Germany’s most populous state, North Rhine Westphalia, registered its biggest jump since the early 1950s, climbing 10.1% year-on-year in September.

The Bank of England had stepped in on Wednesday, after a run on the pound, announcing that it would start buying long-dated bonds, on a temporary basis, in order to calm the market chaos.

However, the relief attached to that move hasn’t lasted long as the European economic outlook remains extremely uncertain, especially given the region’s ongoing energy crisis as winter approaches.

Sweden's coast guard has discovered a fourth gas leak on the damaged Nord Stream pipelines, a spokesperson said Thursday.

The European Union suspects sabotage was behind the leaks on the pipelines carrying gas from Russia to Europe and has promised a "robust" response to any intentional disruption of its energy infrastructure.

In corporate news, Next (LON:NXT) stock slumped over 9% after the U.K. clothes retailer issued its second profit warning this year as soaring inflation holds back discretionary spending.

H&M (ST:HMb) stock fell 4.7% after the retail giant announced an 86% drop in operating profit in the three months through August, hit by its exit from Russia and higher costs.

Additionally, Porsche (F:P911_p) shares debuted on the Frankfurt Stock Exchange on Thursday, with owner Volkswagen (ETR:VOWG_p) hoping to raise about 9.4 billion euros ($9.1 billion) in one of the largest European initial public offerings.

Oil prices weakened Thursday, weighed by a stronger dollar and after Hurricane Ian failed to significantly damage the Gulf’s crude facilities as it landed in Florida.

Both benchmarks had rebounded around 4% over the prior two sessions after reaching nine-month lows this week as Hurricane Ian threatened to disrupt supply in the Gulf of Mexico. The Category 4 hurricane has hit the state of Florida, unleashing drenching rains and threatening extensive flooding, but has since diminished significantly.

By 03:45 ET, U.S. crude futures traded 1.7% lower at $80.78 a barrel, while the Brent contract fell 1.7% to $86.57.

Additionally, gold futures fell 1.2% to $1,649.75/oz, while EUR/USD traded 1% lower at 0.9639.

Latest comments

Down again; Sell all shares now or go broke!!!
German/UK inflation is bullish now. They are forced to tighten -> bring down DXY, which pushes down domestic inflation in the US, which will spur the fed to at least pause hiking. Equities have bottomed short term.
wishful thinking...the reality is hikes from both sides until inflation is under 2%...menain Dow at 20 at the best, extra 30%down....
is European central banks raise interest rates, the dollar will weaken and raise commodity prices. This will force the Fed to raise US interest rates, which will raise European inflation. This will become an iterative process that will drive US interest rates beyond the current 5% ceiling the equity markets are pricing for. when Equity markets recognize this Yang Yang effect, equity markets will take a nose dive. We have not seen the bottom yet. We are probably 15 to 20% over the bottom.
Why does this site still report about these third world countries, especially, germany and the uk????
because it a world market now and the central banks all work together
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