LONDON – European stocks fell on Tuesday after a warm reading of German inflation revived concerns about the rate of monetary tightening of central banks.
The pan-European Stoxx 600 fell 0.5% in the first operations, with a fall in technology stocks of 1.7%, while oil and gas stocks rose 1.2% with the rising oil prices.
Monday’s new data showed that EU-harmonized German inflation stood at 8.7% a year in May, significantly exceeding analysts’ expectations of 8.0% in a Reuters poll and marking a sharp drop at 7.8% observed in April.
French inflation also exceeded expectations in May to a record 5.8%, up from 5.4% in April, preliminary data showed on Tuesday.
Early impressions of rapid inflation in May are also due in Italy and the eurozone in general later on Tuesday. Investors will be on the lookout for indications of the rate and scale of interest rate hikes that may be demanded from the European Central Bank from July.
The burst of corporate business
Shares of the Dutch specialty chemicals company DSM rose 10% in early operations following the announcement of a cash and stock merger agreement with Swiss partner Firmenich.
At the helm of the Stoxx 600, German chemical company Lanxess rose more than 11 percent after announcing a joint venture with private equity firm Advent to buy DSM’s engineering business for about $ 3.7 billion. euros ($ 3.99 billion).
Shares of Unilever rose 7% after British consumer goods giant appointed US activist investor Nelson Peltz to its board of directors.
At the bottom of the European benchmark index, shares of B&M European Value Retail fell more than 8% after the Luxembourg-based convenience company reported flat results for 2022 and warned of sales during the current year.
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World markets are also reacting to a further jump in oil prices after EU leaders agreed on Monday afternoon to ban 90% of Russian crude oil by the end of the year, as part of the bloc’s sixth sanctions package against Moscow since the invasion of Ukraine.
Shares in Asia-Pacific were mixed on Tuesday, as data showed that Chinese manufacturing activity contracted again in May amid Covid-19 blockades in the country, but at a slower pace, indicating some progress towards normalization.
U.S. equities futures also fell silent in early pre-market trading, seeking to take advantage of last week’s momentum after Wall Street closed on Monday for the Memorial Day party.
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