European stock markets falter, inflation worries investors

Weiss/AFP

European stock markets are struggling on Friday, in the wake of Wall Street, with investors showing nervousness in the face of American inflation and the more muscular tone of the American Central Bank (Fed). 

Around 08:10 GMT, the Paris Stock Exchange was down 0.98%, Frankfurt 0.65%, London 0.41% and Milan 0.48%. 

Risk assets like stocks “are struggling to find momentum,” said Deutsche Bank economist Jim Reid. “Investors are considering less than encouraging inflationary data.” 

The economist cites the PPI producer price index for October in the United States as the “first catalyst” for the palpable nervousness on the markets: the index rose to a higher level than expected, at 2.4% over one year against expectations of 2.3%. 

The CPI consumer price index, published on Wednesday, had already accelerated in October, to +2.6% over one year against +2.4% in September. 

Furthermore, an intervention by Jerome Powell, the head of the American Federal Reserve (Fed) at a conference in Dallas, “sowed “further doubts about the likelihood of a rate cut in December,” Mr Reid continued.

Inflation is much closer to our long-term 2% target, but it is not there yet. We are committed to finishing the job,” Powell said, warning of a “sometimes bumpy path” ahead. 

As for the economy, it is “not sending signals that would push us to rush to lower rates,” the central banker added. 

“Perhaps plans changed after Trump's election on the increasing risks of inflation due to pro-growth policies and tariffs,” wonders Ipek Ozkardeskaya, of Swissquote. 

Asian stock markets are nervous about “President-elect Donald Trump's tariff policy (…) with potentially bigger and harsher repercussions than during his first term,” says Stephen Innes, an analyst at SPI AM. During his campaign, Donald Trump promised to impose tariffs of 10 to 20 percent on all imported goods and even 60 percent on those from China. China is also facing “a mixed bag of data,” notes Jim Reid. Retail sales in China rebounded in October, growing at their fastest pace since February. Industrial production growth slowed slightly in October. 

The Shanghai Composite Index lost 1.45%, Shenzhen lost 2.04% and the Hang Seng Index in Hong Kong remained close to balance at +0.06% in late trading. On the Tokyo Stock Exchange, the flagship Nikkei index ended up 0.28%. 

Generali Illuminates 

Italy's number one insurance company, Generali, on Friday published an adjusted net profit (excluding exceptional items) down 3.3% to 2.9 billion euros for the first nine months of the year and confirmed the objectives of its strategic plan.

This result is higher than analysts' forecasts, according to the consensus compiled by Generali, which was counting on an average of 2.75 billion euros. It is welcomed by the market, with the group's share price climbing 4.15% in Milan at around 08:10 GMT. 

Oil hesitates 

Crude prices are “caught in the crosscurrents, between the strength of the dollar, China's economic recovery which is not yet sustained, and the geopolitical tensions which persist”, comments Han Tan, analyst at Exinity. 

For the moment, they are not managing to “overcome the prospects of weakening global demand,” he continues. 

The two global crude oil benchmarks were thus losing ground around 08:10 GMT, with North Sea Brent falling 1.14% to $71.42 per barrel and its American equivalent, West Texas Intermediate (WTI), losing 1.10% to $67.60 per barrel. 

On the foreign exchange market, the dollar lost 0.22% against the single currency, to $1.0553 per euro. 

On the cryptocurrency side, bitcoin was trading at $87,642.67 at 08:10 GMT, down 0.64% after peaking at over $93,000 earlier in the week, a new all-time high. 

 

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