European Markets Fall, Sweden Lifts Rates, German Wholesale Prices Accelerate

Bridgette Randall
20 Sep, 2022
Frankfurt

Benchmark indexes declined after German producer prices rose at a faster pace in August and Sweden lifted its rate by larger-than-expected amount. 

Benchmark indexes opened higher and began the decline after one hour of trading and fell to new lows every next hour and closed at or near the lows of the day. 

Investor sentiment was driven by the persistent uncertainties surrounding energy prices and future rate size increases, 

Investors are increasingly factoring the possibilities of a recession next year and higher rates lasting well into 2024. 

The DAX index fell 1.0% to 12,670.83, the CAC-40 index dropped 1.4% to 5,979.46 and the FTSE 100 index declined 0.6% to 7,192.66. 

 

German PPI Surges

Producer prices in Germany soared at an annual rate of 45.8% in August after rising at 37.2% in July, the Destatis said Tuesday. 

On a monthly basis, producer prices rose at a record rate of 7.9% after rising at 5.3% in July. 

 

Sweden Lifts Rates by 1.0%, More Hikes to Follow 

Sweden's Riksbank lifted its key lending rate by 1.0% or 100 basis points to 1.75%, higher than 75 basis points expected by economists. 

The central bank also held out for higher rates over the next six months and the accompanying statement added that the monetary policy will adjust to bring down the current high inflation rate to 2% by 2025. 

The central bank estimated rates to rise to 2.25% by the year-end and inflation to hover near 8.6% in 2022 and decline to 8.5% in 2023 before declining to 2% in 2025.    

 

Asian Markets Closed Higher, China Rates Stable  

Asian markets closed higher following higher closing in New York in the overnight trading. 

The People's Bank of China left its 1-year and 5-year lending rates unrevised, matching the market expectations. 

The central bank left the 1-year rate at 3.65% and the 5-year rate at 4.3% after trimming rates last month from 3.70% and 4.45% respectively.  

The Nikkei 225 index in Tokyo jumped 0.4% and in Hong Kong added 1.2%. 

The Sensex index in India gained 1.0% on the expectations of a jump in consumer demand during the upcoming festival season and the rupee held stable at 79.89 despite the rising dollar.