Investors digest US inflation data for April

LONDON — European stocks fell on Thursday as investors remained concerned about slowing growth, interest rate hikes and US inflation data.

The pan-European Stoxx 600 index closed down 0.6%, paring heavy losses at the open. Core resources fell 3% as almost all sectors and major stocks ended in negative territory.

Global investors digested the April inflation reading from the US, which showed the consumer price index rose 8.3% in April compared to a year earlier. The inflation rate was higher than expected and is still close to a 40-year high of 8.5%. The reading has sparked concern that an aggressive rate hike path is ahead.

Monetary policy in the current environment is highly questionable, and that in the context of rising commodity prices, and as a result, I think the onus must now fall on an expansionary fiscal policy to try to reduce the risk of recession.

bob parker

Investment Committee Member, Quilvest Wealth Management

The April reading, which represented a slight decline from the March high, was also above the Dow Jones estimate with a gain of 8.1%. Markets in Asia-Pacific closed lower on Thursday, while stocks in the United States were mixed on Friday.

Economists are weighing data indicating slowing growth alongside rising inflation, raising fears of “stagflation” and a possible recession. Central banks face the unenviable task of tightening policy to rein in inflation while trying to avoid exacerbating downside risks to growth.

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The UK economy shrank 0.1% in March but expanded 0.8% for the first quarter of 2022 as a whole, official figures showed on Thursday, missing consensus forecasts and signaling that the worst is yet to come as the country’s cost of living rises. living crisis bites.

“Monetary policy in the current environment is highly questionable and that is in the context of rising commodity prices and consequently I think the onus now has to be on expansionary fiscal policy to try to reduce the risk of recession,” said Bob Parker, a member of the investment committee. at Quilvest Wealth Management, he told CNBC on Thursday.

In Europe, gains came from Veolia, Bouygues, Aegon, Allianz, Commerzbank, RWE, Siemens and Zurich Insurance.

In terms of individual share price movement, BMW shares fell more than 8% while trading ex-dividend. Siemens shares fell 2.5% after the German giant’s net income halved to €1.21 billion ($1.27 billion) in the first quarter as it took a €600 million hit. for charges and impairments associated with Russia.

At the bottom of the Stoxx 600, German copper producer Aurubis fell nearly 9%.

Telefónica shares rose more than 2.6% after the Spanish telecommunications company beat first-quarter earnings forecasts.

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