European Markets Drop 3% On Rising Global Inflation

Bridgette Randall
10 Jun, 2022
New York City

Selling picked up pace on European bourses after the latest U.S. inflation report showed accelerating and deepening inflation pressures. 

European stocks were under pressure after the European Central Bank lifted its inflation outlook and lowered economic growth estimates. 

In addition, traders were also cautious after local governments in Shanghai and Beijing reimposed some of the stringent restrictions in parts of the cities on the rising coronavirus infections. 

The three leading indexes were in negative territory for the first five hours of trading and the indexes plunged after the release of the U.S. inflation data. 

The indexes continued to decline for the next two hours and closed near the lows of the day. 

The DAX index dropped 3.08% to `13,761.08, the CAC-40 declined 2.7% to 6,187.23, and the FTSE 100 index fell 2.2% to 7,317.52. 

For the week, the DAX and CAC-40 indexes declined 5.5% and the FTSE index dropped 2.8%. 

For the year so far, the DAX and the CAC-40 indexes have lost 14.1% and the FTSE 100 index is down 2.8%. 

The S&P 500 index is set to close down at least 6% and extending losses in the year so-far to 19%. The Nasdaq is set to close down 7% and extend this year's losses to 28.3%. 

U.S. consumer prices in May rose at a faster pace as energy price surge continued in the month. 

The Consumer Price Index increased 1.0% in May on a seasonally adjusted basis after rising 0.3% in April, the U.S. Bureau of Labor Statistics reported today. 

Over the last 12 months, the all items index increased 8.6% before seasonal adjustment, faster than 8.3% in the previous month. 

The annual price increases have been accelerating since the lifting of pandemic restrictions as businesses struggle with supply chain issues and rising costs of commodities, food, and energy. 

On a monthly basis, food prices rose 1.2%, energy prices surged 3.9%, and shelter prices rose 0.6%. 

On a year basis, food prices surged 10.1%, energy prices 34.6%, and shelter cost rose 5.5%. 

In regional news, Dutch industrial production rose 13.7% in April after rising at 7.6% in March, the Central Bureau of Statistics said today. 

The largest production increase since June 2021 was driven by a 64.5% surge in machinery productions but transportation equipment production fell 1%. 

On a seasonally adjusted basis, production in April rose 5.3% from a year ago. 

Automakers and insurance companies led the losers. 

Ryanair Holdings dropped 4%, International Consolidated Airlines Group  declined 2%, and Wizz Air fell 3.6% on the rising prospects of labor strikes during the busy summer travel season. 

Mercedes Benz declined 2.1%, BMW fell 2.6%, and Volkswagen dropped 3.2%. Renault SA fell 3.6% and Peugeot SA declined 4.2%. 

Allianz SE dropped 3.6%, AXA declined 3.6%, and Prudential Plc fell 4.2%. 

In Asia, markets were cautious ahead of the release of the U.S. inflation report and the reimposing of restrictions in areas of Beijing and Shanghai also raised the prospects of longer lockdowns. 

The Nikkei index dropped 1.5% to 27,824.29, the Hang Seng Index declined 0.3% to 21,806.18, and the Sensex index dropped 1.8% to 54,303.44.