On Thursday, European shares went up, thanks to luxury and industrial companies. But, gains remained limited because of concerns about rising inflation and a slowdown in economic growth. There was a 0.6% gain in the STOXX 600 index, after the pan-European index had lost 2% of its value in the last two sessions. The London markets will be shut down for the Platinum Jubilee bank holidays of Queen Elizabeth, due to which trading volumes are expected to remain muted. There was a 4.9% increase in Remy Cointreau, as the spirits group based in France, was able to beat its profit estimates for the full year.
Moreover, the company also presented a rather upbeat outlook for 2022 and beyond as well. Some of the other luxury stocks also exhibited the same signs. EssilorLuxottics,L’Oreal and LVMH all climbed up between 1.7% and 3.1%, thereby providing the index with some of its biggest boosts. There was a fall in oil stocks, even though crude prices were able to make up for the losses they had made earlier after OPEC+ announced the decision of boosting crude production for dealing with shortfall due to reduced Russian production. Equinor and the Amsterdam listing of Shell declined by 1.9% and 0.5%, respectively.
According to data, there was a 1.2% increase in producer prices in the Euro zone in the previous month, which was below the 2.3% increase that had been predicted by economists. Earlier this week, other data had shown that consumer prices in the euro zone were touching record highs. There was also an increase in government bond yields to multi-year highs. This was after this week’s inflation data opened up the possibility of aggressive tightening by the European Central Bank (ECB). Analysts said that there were expectations of a faster hike in interest rates.
Inflation data for the Euro zone and Germany had turned out to be considerably higher than expectations, which would have a hawkish impact on the expectations of the central bank. In fact, some analysts believe that the ECB might decide on a hike of 50 basis points in its July meeting. On Thursday, the consumer price data of Switzerland showed that inflation numbers in May had climbed to their highest in 14 years. As for the United States, data showed a lower-than-expected increase in private payrolls in May, which was an indicator of falling labor demand, but job openings were still high.
On Friday, investors were waiting for non-farm payrolls data, as it could indicate how the stock markets would close this week with investors concerned about the aggressive tightening of monetary policy by the Federal Reserve. Central banks globally have been struggling to control the high inflation and markets are under pressure because of a slowdown in growth. The STOXX 600 index is likely to end the week with a decline of 0.6%. SAS, the Scandinavian Airline, rose 1.3% in stocks, because of a report showing that there could be a possible takeover of the company by foreign investors.
