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20.05.202107:50 Forex Analysis & Reviews: European indices fell amid global negative dynamics in stock markets

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Exchange Rates 20.05.2021 analysis

The composite index of the largest enterprises in the region Stoxx Europe 600 by the end of trading lost 1.5% and amounted to 436.34 points.

The British FTSE 100 indicator dropped 1.2%, the German DAX fell 1.8%, and the French CAC 40 dropped 1.4%. Italy's FTSE MIB and Spain's IBEX 35 declined 1.6% and 1.2%, respectively.

Consumer prices in the eurozone in April increased by 1.6% in annual terms, according to the final data of the statistics office of the European Union. These are the highest growth rates since April 2019. Compared to March, inflation amounted to 0.6%.

The figures were in line with the preliminary estimates. Analysts also did not expect their revision.

Meanwhile, the head of the Bank of England Andrew Bailey said that the British Central Bank will not allow inflation to stay above the target level of 2% for a long time. As noted by the Financial Times, this is a signal of the bank's intention to raise interest rates in this scenario.

Bailey's announcement came ahead of the publication of April data on the dynamics of consumer prices in the UK, which showed an acceleration in the rate of their rise to the maximum since the beginning of the pandemic.

Inflation amounted to 1.5% in annual terms compared to 0.7% in March. Experts on average expected 1.4%.

UK house price increases in March were at their fastest since the financial crisis, amid a rebound in the property market thanks to tax breaks and improved economic outlook. As reported by the country's statistics office on Wednesday, residential property prices jumped 10.2% on an annualized basis - the fastest pace since August 2007.

The growing debt burden of the eurozone states and European companies, as well as the consequences of the crisis caused by the coronavirus pandemic, have increased the risks to financial stability in the region, according to the European Central Bank (ECB).

The outlook for the eurozone economy has improved in recent years thanks to lower incidence of COVID-19 and accelerated vaccinations, but a number of serious difficulties remain, according to the ECB's semi-annual financial stability report.

ECB Deputy Chairman Luis de Guindos spoke about the expectations of an improvement in financial and economic conditions. He also added that the consequence of the pandemic will be an increase in debt burden and a deterioration in balance sheets, and these problems, if not addressed, can provoke sharp corrections in the markets, financial tensions or lead to a delay in the economic recovery for a long time.

Oil prices lost about 3% on Wednesday after the publication of a weekly report from the US Department of Energy, which showed an unexpected increase in oil reserves in the country. On this news, shares of oil producers fell in price, including Royal Dutch Shell - by 2.8%, BP Plc - by 2.7% and Total - by 3.3%.

In addition, the quotations of securities of the semiconductor manufacturer ASML Holding - by 2.7% and the software developer SAP - by 1.2%, as well as the world's largest mining companies BHP - by 4.6% and Rio Tinto - by 3.4% fell sharply. %.

Meanwhile, shares in the UK-based infrastructure investment John Laing Group Plc jumped 11.3% after KKR & Co. announced the purchase of the company for £ 2 billion ($ 2.84 billion).

The market value of Ferguson Plc increased by 2.2%. The British manufacturer of sanitary and heating equipment in the third fiscal quarter increased its revenue by 25% compared to the same period last year. Underlying operating income jumped 68%.

Eseguito da Thomas Frank
Esperto analista di InstaForex
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