European Stocks Volatile Ahead Of U.S. Inflation Data

European stocks are trading mixed and volatile on Friday as anxiety over tapering and tightening selectively played out to deny a uniform direction or sentiment to the major regional bourses. London’s FTSE 100 and the pan-European Stoxx 600 traded close to the flat-line whereas Frankfurt’s DAX 30, Paris’ CAC 40 and the Swiss Stock market Index SMI are declining from previous closing levels. A high inflationary forecast by the Bank of England emerged just as the anxiety over aggressive monetary policy by the U.S. started to wane following a series of dovish comments by U.S. officials. B.O.E. however left policy rates unchanged and maintained that inflationary spikes would most likely be transitory. Meanwhile European Central Bank released data that showed loans to households in the Euro Area rise by 3.9 percent in May 2021, the largest increase since December 2008. Credit to companies was up by 1.9 percent whereas private sector credit growth slowed to 2.7 percent.

U.K.’s FTSE 100 oscillated between and 7138.39 and 7109.79 and is currently trading at 7112, higher by 0.03 percent from previous close in the backdrop of the Bank of England’s inflation forecast of 3 percent. JD Sports Fashion is trading higher by 4.95 percent whereas Flutter Entertainment is trailing the previous-close levels by 2.64 percent. Data also showed that the United Kingdom’s GfK Consumer Confidence number for June was -9 unchanged from May and its highest since March 2020.

France’s CAC 40 traded flat to lower during the day and is currently at 6617.24, down by around 0.21 percent. Arcelormittal is trading higher by 2.86 percent whereas Renault is down 1.78 percent.

Germany’s Dax 30 has by now shed almost 0.17 percent to trade at 15562.05 as compared to previous close of 15589.23. Adidas has gained around 5.3 percent whereas MTU Aero Engines has corrected by 1.98 percent. Meanwhile, Germany’s GFK consumer sentiment index for June rose to -0.3 points surpassing a consensus forecast of -4.0, and up from -6.9 in the previous month.

Switzerland’s Stock Market Index is also down from previous close and is currently trading near 11986 after losing 0.06 percent in early trade. The index is however still trading close to the 52-week high of 12072.11 hit on 18th June 2021.

The pan-European Stoxx 600 is currently trading near the 456.89 level, down by 0.03 percent from previous close but still close to the 52-week high of 460.51 breached on 14th June.

On Thursday, CAC40 had surged by 1.22 percent, the pan-European Stoxx 600 had added 0.87 percent, the DAX 30 had gained 0.86 percent, the SMI had strengthened by 0.80 percent whereas the FTSE 100 had added a more modest 0.51 percent.

Overnight, the Nasdaq 100 had closed at 14366 after gaining 0.64 percent from previous close whereas the Dow Jones Industrial Average had finished trade at 34197 after rallying 0.95 percent from the previous day. Sentiment remained strong at the Wall Street bourses following President Biden’s infrastructure deal and the earlier dovish comments by Treasury Secretary Janet Yellen and Fed Chair Powell.

In addition to the domestic economic indicators, markets are also keenly awaiting the Private Consumption Expenditure data to be released by the U.S. Bureau of Economic Analysis later today. The Core PCE, considered an important measure of inflationary pressures in the economy is expected to set directional cues to global markets in the coming week.

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