Europe midday: Shares flat as eurozone inflation hits fresh record
The downbeat mood on European markets continued on Friday after suffering their worst quarter since the onset of the Covid-19 pandemic, as Eurozone inflation jumped to a fresh record high in June.
Europe’s pan-regional Stoxx 600 index was flat with all major bourses mixed.
Investors are fretting that aggressive measure to tackle rampant inflation will spark a recession at a time when the global economy is trying to claw its way back from the Covid pandemic.
Inflation in the eurozone bloc rose to 8.6% from 8.1% in May, with energy the biggest upward contributor, at 41.9%, up from 39.1% in May.
This was followed by food, alcohol & tobacco, at 8.9% versus 7.5% in May, non-energy industrial goods, at 4.3% versus 4.2% and services, at 3.4% compared with 3.5%. Analysts had been expecting headline inflation to come in at 8.4%.
Shares in Asia-Pacific were lower overnight with Japan’s Nikkei 225 leading losses in the region, after the Bank of Japan’s quarterly business sentiment survey posted a sharp decline in the April-June period.
However, China’s manufacturing activity expanded at its sharpest rate for 13 months in June, boosted by resurgent output after the easing of Covid-19 lockdown measures.
"There are concerns that, just like in the seventies era, demand and inflation won’t fall back easily, and that the Federal Reserve and other central banks will have to step on the accelerator of interest rate hikes to bring red hot prices under control. The risk is that could see economies slam into a brick wall of recession, with ripple effects around the world," said Hargreaves Lansdown analyst Susannah Streeter.
In equity news, shares in FDJ fell 6.75% after Citigroup downgraded the French lottery company’s stock from to ‘sell’ from ‘buy’.
Swedish real estate company SBB, which gained more than 10% after publishing a 2021 cash flow statement.
Reporting by Frank Prenesti at Sharecast.com