European Indexes Drop After ECB Comments

Barry Adams
24 May, 2022
New York City

Market indexes in Europe traded lower after the European Central Bank president raised the prospects of a rate hike at the next policy meeting in June. 

The DAX index declined 1.5% to 13,956.31, the CAC-40 index fell 1.5% to 6,263.08, and the FTSE 100 index decreased 0.4% to 7,485.09. 

The eurozone economies are facing supply shocks driven by higher oil and natural gas prices and global supply chain disruptions. 

The producer and consumer prices are rising at 4-decade high rates across the currency block. 

Last week, Germany reported producer price increase of 33% in April, a record high in decades. 

 "The next step in rate normalisation will involve following through with our forward guidance on ending net asset purchases and on rate lift-off.

If we see inflation stabilising at 2% over the medium term, a progressive further normalisation of interest rates towards the neutral rate will be appropriate. 

But the speed of policy adjustment, and its end point, will depend on how the shocks develop and how the medium-term inflation outlook evolves as we move forward," Lagarde highlighted in a post on the ECB website. 

Tele2 AB dropped 8.2% to 115 Swedish krona after Kinnevik sold a 7.2% stake in the telecom operator. 

Adevinta ASA gained 2% after the classified advertising company reported first quarter sales rose 5% to 387 million euros and swung to profit of 72 million euros or 6 cents a share compared to 38 million euros or 6 cents loss a year ago. 

The company reaffirmed its long term revenues increase of 15% and EBITDA margin between 40% and 45%. 

In the second quarter, the company estimated revenues to increase in low double-digits in core markets and operating income between 575 million and 600 million euros excluding discontinued operations. 

Barclays PLC rose 3.6% to 163.46 pence after the bank launched a one billion pound stock buyback program.

Renewi PLC jumped 6% after the waste recycling company reported full-year revenues rose 10% and core earnings rose 83%.  

The British pound declined against the euro and the U.S. dollar after the Purchasing Managers' index showed a severe slowdown in economic activities in May compared to robust activities in the eurozone. 

The Chartered Institute of Procurement & Supply composite output index dropped sharply to 51.8 in May from 58.2 in April, lower than expected reading of 56.5.

The euro area private sector index declined to 54.9 in May from 55.8 in April, a smaller than expected decline. 

The private sector expanded on a strength in service activities driven by household demand.  

In Asian markets, China focused indexes failed after the latest stimulus measures failed short of expectations by a wide margin. 

The Shanghai Composite index declined 2.4% to 3,070.93 and the Hang Seng Index fell 1.4% to 20,112.35. 

In Tokyo, the Nikkei 225 index declined 0.9% to 26,748.11 and the latest private survey showed manufacturing activities growth declined slightly in May from April.