European Markets Nosedived After Hawkish Comments from ECB President

Bridgette Randall
27 Jun, 2023
Frankfurt

European markets erased morning gains after rate hike worries resurfaced. 

Major averages in Paris and Frankfurt turned lower after European Central Bank President Christine Lagarde reiterated the central bank's commitment in lowering inflation to 2%. 

The European Central Bank will continue to increase rates at the next meeting in July, barring any material geopolitical event, Lagarde reiterated her stance. 

President Lagarde said at the ECB Forum that inflation is too high and rates are likely to go higher and it is too early to predict peak rates. 

Market sentiment sapped after hawkish comments from Lagarde but earlier in trading indexes advanced on the hopes of more targeted stimulus announcement from Chinese leaders. 

Resource stocks advanced before erasing most of the session's gains and auto sector stocks turned lower but financial services and banks traded higher.

 

Europe Indexes & Yields 

The DAX index increased 0.03% to 15,818.32,  the CAC-40 index declined 0.05% to 7,180.93 and the FTSE 100 index dropped 0.3% to 7,433.84.

The yield on 10-year German Bunds inched lower to 2.29%, French bonds traded lower to 2.83%, the UK gilts edged down to 4.31% and Italian bonds decreased to 3.94%.

The euro edged higher to $1.09, the British pound to $1.273 and the U.S. dollar fetched 89.42 Swiss cents.

Brent crude decreased $1.78 to $72.38 a barrel and the Dutch TTF natural gas increased €0.65 to €32.63 per MWh.

 

Europe Stock Movers

Resource stocks were in focus on hopes that China will offer more targeted stimulus measures to revive faltering economic recovery soon. 

However, fears of higher rates also negatively impacted the metals and mining sector stocks. 

Antofagasta Plc declined 0.4% to 1,464.50 pence and Glencore plc dropped 0.2% to 436.55 pence. 

Wise Plc soared 633.20 pence after the company reported a surge in profit in the financial year ending in March. 

Prosus NV increased 5.5% to €66.49 and Naspers Limited jumped 8.3% to €31.60 after the company received an approval from South African regulators to eliminate cross holding structure. 

Sanofi SA declined 0.4% to €53.50 despite the drugmaker reporting positive results from its phase 2B study of Amlitelimab in adults with moderate-to-severe Atopic Dermatitis, a condition that causes dry, itchy and inflamed skin. 

JD Sports Fashion Plc declined 5.6% t0 138.40 pence after the specialty retailer reported a slowdown in sales in May. 

Porsche Automobil Holding SE declined 1.4% to €53.50 and the company signed a 5-year revolving credit for €2.5 billion to improve its liquidity position.