European Markets Falter After Euro Zone Inflation Accelerates

Bridgette Randall
01 Jul, 2022
New York City

Benchmark indexes in Europe were broadly higher after manufacturing growth eased less than expected and inflation accelerated in the euro zone. 

The inflation in the euro zone accelerated to 8.6% in June from 8.1% in May according to the preliminary estimate released by the eurostat Friday. 

Energy prices rose 41.9% in June compared to 39.1% in May and food, alcohol, and tobacco prices advanced 8.9% compared to 7.5%, non-energy industrial goods prices increased 4.3% from 4.2%, and the cost of services fell to 3.4% from 3.5%. 

Italian consumer prices rose at 8.0% in June after rising at 6.8% in May, a  separate report from the Italian statistics office Istat showed Friday. 

The manufacturing Purchasing Managers' Index fell to a 22-month low of 52.1 in June from 54.6 in May, final data from S&P Global showed Friday.

The preliminary estimate was 52.0, any data above 50 indicates expansion. 

The manufacturing activities rose at the weakest pace in nearly two years on weaker new orders and production and the overall index declined for the fifth month in a row.  

The U.K. Manufacturing growth slowed in June after production stalled and new order intake contracted for the first time in more than a year. 

The Chartered Institute of Procurement & Supply 's final Purchasing Managers' Index dropped to a two-year low of 52.8 in June from 54.6 in May.

The DAX index rose 0.2% to 12,813.03, the CAC-40 index increased 0.14%, and the FTSE 100 index fell a fraction to close at 7,168.85. 

The Dutch semiconductor equipment maker ASML fell 6.6% and Infineon dropped 3.5% after the U.S. based memory chip maker Micron Technology  offered a business outlook significantly weaker than anticipated. 

Siemens AG declined 1.2% after the German conglomerate said it plans to book a non-cash 2.8 billion euros impairment charge for its investment in Siemens Energy AG. 

Shell Plc declined 1.2% after Russia seized its minority stake in Sakhalin Energy Investment Company focused on natural gas projects. 

Trading companies Mitsui and Mitsubishi along with Shell controlled just under 50% stake in the joint venture with Russia-controlled Gazprom. 

Sodexo SA gained 4.1% to 69.78 euros after the French catering company reported fiscal year third quarter revenues increased 23% and reiterated its full-year outlook. 

TUI AG increased 3.3% to 136.85 pence after the travel service and tour operator said it has repaid loans received from the government under Silent Participation II of 671 million euros.

Including interest, the company repaid 725 million euros to the economic stabilization fund. 

The company repaid loans after completing capital in mid-May from new investors.  

 

Asian Markets Fall On Weak China, Japan and S. Korea Economic Data 

Stocks in Asia closed down after manufacturing activities stalled in the region and India imposed windfall tax on oil companies. 

The Nikkei 225 index declined 1.7% to 25,935.92, Shanghai Composite index fell 0.32% to 3,387.64, the Kospi average  decreased 1.17% to 2,305.42, and the Sensex index eased 0.2% to 52,907.93. 

Markets in Hong Kong were closed for a holiday.   

The Nikkei fell near a two-week low after the Bank of Japan[s tankan survey of large companies showed sentiment worsened in the three-month period to June. 

The business executives estimated the yen to weaken to 131.65 against one dollar from the previous estimate of 128.20 in the March survey. 

Japan's jobless rate increased unexpectedly to 2.6% in May from 2.5% in April, the Ministry of Internal Affairs said Friday. 

The unemployment rate increased for the first time in four months. 

The private survey in China showed manufacturing activities expanded for the first time in four months in June. 

Home sales in China also appear to be on the rebound in June according to the latest data release by China Real Estate Information Corp on Friday. 

Total home sales for the top 100 real estate developers increased 61.2% in June to 733 billion yuan or $109.4 billion, ahead of 5.6% rise in May. 

India's manufacturing activities expanded in June but growth slipped to a nine-month low on elevated price pressures. 

The S&P Global factory Purchasing Managers' Index fell to 53.9 in June from 54.6 in May. 

Any reading above 50 indicates expansion.

The manufacturing sector expanded for the 12th month in a row but the growth rate slipped to the weakest since September 2021. 

India imposed windfall tax on domestic oil companies to sustain domestic fuel supply and raise about 67,000 crore rupees or about $9 billion. 

The Sensex declined 111.01 or 0.2% to 52,907.93 and the Nifty 50 index decreased 28.20 or 0.2% to 15,752.05.

South Korea's Trade Deficit Record High In First Half  

South Korea's exports in June rose 5.4% to a record high $57.73 billion on solid demand for chip and petroleum products. 

The export increased for the 20th month in a row but slowed to a single-digit after expanding double-digits for 15 months in a row. 

June imports rose 19.4% to $60.2 billion resulting in a trade deficit of $2.47 billion. 

Exports in the first half increased 15.6% to a record half-year high of $350.3 billion and imports advanced 26.2% to $360.6 billion on high energy and raw materials prices.