European Stocks Close Marginally Higher

European markets closed marginally higher on Wednesday despite looking for direction almost right through the day’s session.

Investors, apart from digesting the latest batch of economic data from the Euro area and China, looked ahead to the Federal Reserve’s monetary policy announcement for clues on inflation and growth outlook, and hints about any possibility of tapering of asset buying programs.

Chinese factory output, investment growth and retail sales figures all missed expectations, due to disruptions caused by COVID-19 outbreaks in the country’s southern export powerhouse of Guangdong.

Meanwhile, data from the Office for National Statistics showed earlier in the day that U.K. consumer price inflation accelerated to 2.1% in May from 1.5% in April. This was above economists’ forecast of 1.8% and the Bank of England’s target of 2%.

UK house price growth slowed in April for the first time since mid-2020, the Office for National Statistics said. Average house prices increased 8.9% year-on-year in April, slower than the 9.9% rise in March. The rate of inflation slowed for the first time since July 2020.

Meanwhile, the ifo Institute said in its Summer forecast that the German economy is set to grow at a slower than previously estimated pace this year as the bottlenecks in the supply of intermediate products weigh on manufacturing activity.

Gross domestic product is expected to grow 3.3% in 2021, down from the 3.7% growth estimated in March. However, the projection for next year was lifted to 4.3% from 3.2%.

The pan European Stoxx 600 advanced 0.23%. The U.K.’s FTSE 100 gained 0.17%, France’s CAC 40 climbed 0.2% and Switzerland’s SMI surged up 0.5%, while Germany’s DAX shed 0.12%.

Among other markets in Europe, Belgium, Denmark, Finland, Ireland, Netherlands, Norway, Portugal, Russia and Sweden ended higher.

Austria, Czech Republic, Greece, Iceland, Poland, Spain and Turkey closed weak.

Flutter Entertainment, Renishaw, Weir Group, Admiral Group and Bunzl gained 2 to 3.25%. Rolls-Royce Holdings, Johnson Matthey, Aveva Group, Intertek Group, Berkeley Group, RightMove, IHG, BT Group and Sainsbury (J) also ended notably higher.

Associated British Foods, Vodafone Group, Glencore, Anglo American Plc, Barclays Group, BP and Segro shed 1 to 2%.

In France, WorldLine, Safran, Air Liquide, Renault, Pernord Ricard, Michelin, Airbus Group, Dassault Systemes and Air France-KLM closed notably higher.

Societe Generale, ArcelorMittal, Credit Agricole, Faurecia, Carrefour, BNP Paribas and Valeo shed 1 to 2.5%.

In the German market, Munich RE, MTU Aero Engines, Beiersdorf and RWE moved up sharply, while Thyssenkrupp, Deutsche Bank, BMW, Merck, Continental, Siemens and SAP closed notably lower.

Shares of Dutch retailer Colruyt Group plunged sharply after the company issued a profit warning.

The Fed is widely expected to leave monetary policy unchanged today. The central bank’s accompanying statement is expected to provide clues about future rate outlook, inflation and possibility of tapering of asset buying programs.

Many analysts expect the Fed to signal that it is starting to think about tapering.

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