European stock markets fell Thursday, ending a rough month on a bad note. Investors were worried that aggressive monetary tightening to stop inflation would cause a big slowdown in the global economy.
By 3:40 a.m. ET (07:40 GMT), the DAX in Germany was down 2.2%, the CAC 40 in France was down 2.1%, and the FTSE 100 in the UK was down 1.7%.
The major indices in Europe are on track to have big drops this month. The DAX is expected to fall the most, by over 11%.The mood is very low because the war in Ukraine doesn’t look like it will end soon, the ECB is about to start raising interest rates to try to stop inflation from rising, and the economy is still struggling to get back on its feet after the COVID pandemic.
Even though high inflation continued to hurt consumers, German retail sales went up by 0.6% in May compared to the month before. This was shown by data released on Thursday.
But this small bit of good news has been overshadowed by the fact that French inflation hit a record high of 6.5% in June. This has caused people to worry that Friday’s official Eurozone CPI data will also reach a new high.
Christine Lagarde, president of the European Central Bank, said this week at the central bank’s annual forum that inflation in the Eurozone is “undesirably high” and that the central bank will go “as far as necessary” to bring inflation back down to its 2 percent target.
In a speech to the ECB forum, the head of the Federal Reserve, Jerome Powell, said it was “likely” that aggressive monetary policy actions to stop prices from going up would cause a wider economic slowdown.
In business news, shares of Uniper (ETR: UN01) fell almost 20% after a German energy group said it is in talks with Berlin about a possible government bailout. This is because Russian gas supplies were cut off earlier this month.
The stock of Saab (ST: SAABb) went up 5% after the Swedish government ordered one of the company’s GlobalEye Airborne Early Warning and Control aircraft.
Before the latest meeting of the top crude-producing countries, oil prices were mostly flat on Thursday. This means that oil is on track to have its first monthly loss of the year.
Most people think that the Organization of Petroleum Exporting Countries and its allies will confirm a small production increase for August later on Thursday. There isn’t much room for a big production increase, since the group has been struggling to meet its agreed-upon production goals this year.
In the week ending June 24, crude stockpiles in the U.S. went down by about 2.8 million barrels, but gasoline stockpiles went up. This is likely because near-record prices made people stay closer to home.
By 3:45 a.m. ET, US crude futures were 0.2 percent lower at $109.53 per barrel, putting them on track for a more than 4% monthly loss. The Brent contract was 0.2 percent lower at $112.18, putting it on track for a 2% monthly loss.
Gold futures fell 0.2 percent to $1,813.85/oz, while the EUR/USD rose 0.1 percent to 1.0449.
