Europe down, inflation fears persist, Corporate news

PARIS, May 12 (Reuters) – Major European stock markets fell in early trading on Thursday after major Wall Street indices fell the day before, with U.S. inflation data fueling concerns over the pace of monetary tightening in the Federal Reserve and its impact on the economy.

In Paris, the CAC 40 lost 1.88% to 6,151.90 points around 08:25 GMT. In London, the FTSE 100 lost 2.03% and in Frankfurt, the Dax fell 1.86%. The EuroStoxx 50 index is down 2.05%, the FTSEurofirst 300 1.94% and the Stoxx 600 1.87%. The less marked than expected slowdown in the rise in consumer prices in the United States dragged Wall Street into the red on Wednesday: the Dow Jones index fell by 1.02%, the S&P-500 by 1.65% and the Nasdaq Composite, weighed down by the decline of Apple (-5.2%), by 3.18%. The “core CPI” index, which excludes energy and food, even accelerated with a rise of 0.6% over one month after +0.3% in March.

“The stronger-than-expected rise in inflation has heightened concerns about the need for the Fed to step up monetary policy tightening,” said Rodrigo Catril at National Australia Bank. Data for May will be released five days before the institution’s June meeting and a 75 basis point rate hike would become a “strong possibility” in the event of another nasty surprise, he added. Investors’ fears about the economy are leading them to take refuge in assets deemed to be the safest, starting with sovereign debt. The yield on ten-year Treasuries lost seven basis points to fall to 2.8389%. The gap with the two-year yield, the most watched, remains positive at 26.15 basis points, but continues to narrow. The ten-year German lost 11 basis points to 0.886%.

On the stock market, all European sectors are in the red and the biggest drops go to the compartments of basic resources (-3.43%) and non-constrained consumption (-2.54%). In Paris, luxury industry heavyweights Kering, LVMH and Hermès lost 3.70% to 4.46%. In Frankfurt, Commerzbank, Siemens and Heidelbergcement fell from 2.71% to 5.89% after the publication of their results. On the rise, semiconductor maker STMicroelectronics gained 3.45% after saying it was aiming for annual revenue of more than $20 billion (€19.04 billion) by 2027 at the latest, thanks to demand always supported by the automotive and industrial sectors and smartphone manufacturers.

(Written by Laetitia Volga, Editing by Kate Entringer)

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