Europe close: Inflation jitters sink stocks as oil prices surge

28th May 2024 16:19

(Sharecast News) - A lack of economic data and corporate results prompted a mild sell-off across European stock markets on Tuesday, with investors choosing to keep their powder dry before key inflation data later in the week.

The Stoxx 600 index declined 3.13 points or 0.6% to 519.08. The index has traded within a narrow range of just five points or so since hitting a new all-time closing high of 524.71 on 15 May.

London's FTSE 100 dropped 0.7%, while the Cac in Paris fell 0.9% and Frankfurt's Dax slipped 0.5%. Indices in Milan and Madrid, meanwhile, lost 0.3% and 0.4%, respectively.

''A light economic calendar and lack of triggers after a prolonged weekend in the US and UK led to softer trading on Tuesday", said Axel Rudolph, senior market analyst at IG.

Eyes will now turn to eurozone inflation data on Wednesday and US personal consumption expenditure data, which is the US Federal Reserve's targeted inflation measure, on Friday.

Wall Street got off to a negative start following the long weekend after comments from Minneapolis Federal Reserve president Neel Kashkari, who said in an interview with CNBC that the Fed is looking for "many months" of positive inflation data before it considers cutting interest rates.

Adding to inflation concerns was a surge in the price of oil, with WTI crude up 2.5% at $79.67 a barrel and Brent up 1.1% at $83.82 amid worries about geopolitical volatility in the Middle East. Israeli airstrikes killed 45 people in a Rafah camp for displaced people on Sunday, while there were reports of further strikes on Tuesday afternoon.

Meanwhile, there were rising expectations that OPEC+ will extend output cuts of 2.2m barrels per day into the second half of the year when it meets at the weekend.

Market movers

Investment firm Intermediate Capital Group rose 2% after it more than doubled profits in the year ended 31 March due to a huge increase in performance fee income, while assets under management rose by nearly a quarter.

German flavour and fragrance maker Symrise was up after Deutsche Bank raised its rating to 'buy' from 'hold'.

JD Sports Fashion gained 5% ahead of annual results due out on Wednesday, with like-for-like sales expected to rise 4.2%. Peel Hunt analysts are forecasting a 7.2% fall in pre-tax profit £920m, while the company, which issued an earnings warning in January saw a maximum of £935m.

DraftKings and FanDuel owner Flutter Entertainment dropped 7% after the Illinois Senate passed a bill that would make Illinois the second most expensive state for wagers to do business in, with companies having to pay a top rate of 40% tax.