European stock markets drop at open

The German share price index DAX graph is pictured at the stock exchange in Frankfurt July 11, 2022. — Reuters pic

The German share price index DAX graph is pictured at the stock exchange in Frankfurt July 11, 2022. — Reuters pic

Wednesday, 13 Jul 2022 4:19 PM MYT

LONDON, July 13 — Europe’s main stock markets retreated sharply today, accelerating losses ahead of vital US inflation data for June.

London’s FTSE 100 index lost 1.1 per cent to 7,134.22 points compared with yesterday’s close, despite news of rebounding UK economic growth in May.

In the eurozone, Frankfurt’s DAX index slid 1.2 per cent to 12,746.77 points and the Paris CAC 40 shed 0.9 per cent to 5,990.95.

The euro clawed its way back slightly one day after hitting parity with the dollar for the first time in two decades on eurozone recession fears.

“Markets are on tenterhooks ahead of the US inflation data which will hold great sway over the Fed’s rate-hike plans,” said Exinity Markets analyst Han Tan.

“A fresh four-decade high for the CPI headline print, along with more signs of unabating inflationary pressures, may well force the Fed to punch harder and faster in its battle against runaway consumer prices.”

Markets fear more evidence of red hot US inflation will prompt the Fed to double down on large interest rate hikes after it ramped up rates last month by three-quarters of a percentage point.

US inflation had spiked to a four-decade high of 8.6 per cent in May.

The world’s major central banks are ramping up borrowing costs in a bid to drive down surging consumer prices.

Inflation is soaring worldwide as economies reopen from pandemic lockdowns and amid the Ukraine war that is pushing already high energy costs skyward. — AFP