European stock markets saw declines on Tuesday, influenced by fresh data from the UK and the US.
This information led to a more cautious stance on monetary policy, tempering hopes for swift interest rate reductions by central banks.
In Paris, the CAC40 fell by 0.84%, while Milan’s FTSE MIB dropped by 1.03%. Lisbon’s PSI 20 and Madrid’s IBEX 35 also saw decreases.
Investors initially reacted to local data, but US inflation figures, indicating a potential delay in the Federal Reserve’s rate cuts, heightened risk aversion.
Susannah Streeter predicts UK employment and wage growth may extend higher rates by the Bank of England.
The UK’s unemployment rate dipped to 3.8%, with wages climbing 6.2%, surpassing forecasts.
Expectations for a May rate cut in the UK have now shifted, possibly being pushed back.
The FTSE 100 in London closed down, affected by industrial and tech sectors, though AstraZeneca’s stock managed a gain.
Market analysts predict continued caution as they await further data, which could clarify central bank policies.
Germany’s ZEW index showed a positive shift, hinting at potential growth within the Eurozone and suggesting possible ECB rate cuts in early 2024.
In Frankfurt, DAX fell 0.92%; ASML shares in Amsterdam dropped, possibly due to a “fat finger” trade, per Bloomberg.
This situation underscores the delicate balance central banks must maintain between stimulating growth and controlling inflation, impacting global market sentiments.
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