Europe open: Stoxx slips as investors eye UK CPI, fiscal statement
European shares opened lower on Wednesday as investors assessed a surprise fall in UK inflation and awaited an economic statement from British Finance Minister Rachel Reeves, which was expected to include savage cuts to public spending.
The pan-regional Stoxx 600 index was down 0.21% at 551 in early deals. Germany’s DAX was down by a similar amount while the UK’s FTSE 100 was up slightly by 0.06%.
Headline UK inflation in February fell to 2.8% year on year from 3%, with core CPI – which strips out volatile items such as food and energy - down to 3.5% from 3.7.
Analysts said the fall boosted the case for an interest rate cut from the Bank of England in May, but also warned that inflation would probably rise again as higher taxes introduced in the last Budget kicked in next month.
Meanwhile, Reeves will deliver her so-called “spring statement” and is expected to unveil huge cuts to welfare spending – seen as a return to austerity measures imposed by previous Conservative governments from 2010 onwards - including benefits for disabled people as she struggles to meet her self-imposed fiscal rules on borrowing.
The government is looking for cuts to pay for its pledge to ramp up defence spending after US President Donald Trump pivoted towards Russia over the war in Ukraine as it seeks to secure financial deals with Moscow and an agreement on Ukraine’s future minerals production.
In equity news, CD Projekt fell almost 10% as the game developer on Tuesday said the release date for the first part of its ‘Witcher IV’ trilogy would be after 2026.
Reporting by Frank Prenesti for Sharecast.com