European Stocks Close On Mixed Note After Cautious Session

European stocks turned in a mixed performance on Tuesday as investors made cautious moves amid concerns about rising inflation in the U.S., and worries about surging coronavirus cases and fears of possible fresh restrictions in several places across the world.

Strong earnings from top name U.S. banks JP Morgan Chase and Goldman Sachs, and encouraging Chinese trade data aided sentiment.

British Health Secretary Sajid Javid confirmed England will lift most lockdown restrictions from next Monday (July 19th).

Bank of England lifted the restrictions on dividend payouts that were introduced during the pandemic with immediate effect, citing the results of recent stress tests and lower-than-expected loan losses.

The pan European Stoxx 600 edged up 0.03%. The U.K.’s FTSE 100, Germany’s DAX and France’s CAC 40 all ended lower by 0.01%. Switzerland’s SMI ended 0.09% down.

Among other markets in Europe, Austria, Czech Republic, Greece, Ireland, Portugal, Spain and Turkey closed weak.

Finland, Iceland, Netherlands, Poland and Sweden ended higher, while Belgium, Denmark, Norway and Russia closed flat.

In the UK market, Fresnillo climbed 3.1%. Ashtead Group, Rentokil Initial, Halma, Rightmove, Scottish Mortgage, Diageo, Polymetal International, Auto Trader Group, Severn Trent, DCC, Bunzl, Coca-Cola, Experian, Spirax-Sarco Engineering and Just Eat Takeaway gained 1 to 2%.

Natwest Group, IAG, Rolls-Royce Holdings, Whitbread, Ocado Group, Land Securities, Antofagasta, British Land, Barclays Group, Melrose Industries, Standard Chartered, Aviva and BP lost 1 to 3%.

In the French market, Publicis Groupe gained more than 2%. Valeo, Bouygues, Faurecia and Hermes International advanced 1 to 1.6%, while Unibail Rodamco, Renault, Air France-KLM, Technip, Accor, Credit Agricole, ArcelorMittal, Safran and Societe Generale shed 1.3 to 2.3%.

In Germany, Deutsche Bank, MTU Aero Engines, RWE, Volkswagen, Thyssenkrupp, Lufthansa, BME, Deutsche Wohnen and Deutsche Post ended with sharp to moderate losses.

In economic releases, Germany’s consumer price inflation eased in June for the first time in six months, latest data from Destatis confirmed.

The consumer price index rose 2.3% year-on-year following a 2.5% increase in May, which was the highest rate in nearly a decade.

France’s consumer price inflation accelerated slightly in June, rising to 1.5%, driven by the rebound in manufactured goods prices, latest data from the statistical office Insee confirmed. Consumer price inflation rose 1.4% in May.

Core inflation, which excludes prices of fresh food and energy, accelerated to 1.1% from 0.9% in the previous month.

UK retail sales logged a double-digit growth in June driven by the easing of lockdown restrictions, the British Retail Consortium reported. In June, retail sales advanced 13.1% on a yearly basis. Like-for-like sales were up 17% from the same period last year.

Switzerland’s producer and import prices increased by 2.9% year-on-year in June, data from the Federal Statistical Office showed. The producer price index increased 1.7% annually in June and import prices accelerated 5.6%. On a monthly basis, producer and import prices increased 0.3% in June.

In U.S. economic news, a report from the Labor Department showed consumer prices in the U.S. saw the biggest monthly increase in thirteen years in the month of June. The report said the consumer price index jumped by 0.9% in June after climbing by 0.6% in May. Economists had expected consumer prices to rise by 0.5%.

The bigger than expected increase in consumer prices reflected the biggest advance since prices surged up by 1% in June of 2008.

Core consumer prices were up by 4.5% year-over-year in June, reflecting an acceleration from the 3.8% jump in May. Core prices saw the biggest annual increase since November of 1991.

“The surge in demand triggered by the easing of Corona-related restrictions is causing significant bottlenecks and price increases in parts of the economy,” said Dr. Christoph Balz, Senior Economist at Commerzbank. “Under these circumstances, the Fed’s tapering of its bond purchases is drawing closer.”

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