European stock markets close mixed, with inflation slowing in the region

Stock markets in Europe closed mixed this Wednesday (18), after data confirming the deceleration of consumer inflation (CPI) in the euro zone and in the United Kingdom. Investors also reacted to statements by European Central Bank (ECB) leaders, who reinforced their commitment to raising interest rates to contain rising prices.

In London, the FTSE 100, fell 0.26%, to 7,830.70 points, while the DAX index, in Frankfurt, followed the movement and closed down 0.03%, to 15,181.80 points. The CAC 40, in Paris, advanced 0.09%, to 7,083.39 points, and the FTSE MIB, in Milan, closed up 0.27%, to 26,052.39 points. In Madrid, the Ibex 35 index rose 0.39% to 8,925.50 points. Finally, on the Lisbon Stock Exchange, the PSI 20 dropped 0.50% to 5,968.13 points. Quotes are preliminary.

This Wednesday, the annual rates of the CPI of the United Kingdom and of the euro zone presented deceleration, in line with the forecast of analysts consulted by The Wall Street Journal. The slowdown is an important driver for ECB and BoE officials, who have stated on several occasions that monetary policy is guided by inflation.

However, according to Oxford Economics, with Eurozone core CPI prices still high, the forecast is for two more 50bp hikes before a break in the bull cycle. The view is in line with the speech of ECB board member François Villeroy de Galhau, who highlighted, at the World Economic Forum, in Davos, that it is necessary to “stay the course in the fight against inflation” and that “probably” the rate in the euro zone should reach its peak in this first semester.

As for Capital Economics, in relation to the UK CPI, prices remained high in the country, so that the forecast is for more interest rate hikes by the Bank of England (BoE). According to an analysis by CMC Markets, the country’s “sticky” inflation was the reason the FTSE 100 closed lower today.

On the other hand, according to the same analysis by CMC Markets, shares of companies in the commodity sector are leading gains, with copper prices rising to their highest levels since June last year, pulling companies such as Glencore (more than 4% ), Antofagasta (more than 3%) and Anglo American (more than 2.5%). Also in the commodities sector, Polymetal jumped more than 7%. All are from the London Stock Exchange.

Also on the radar of investors were prospects of recession in Europe. In Davos, European Union Economic Affairs Commissioner Paolo Gentiloni told Reuters that Europe could avoid a recession with “limited contraction”.