AGL 7.91 Decreased By ▼ -0.09 (-1.13%)
ANL 11.30 Decreased By ▼ -0.02 (-0.18%)
AVN 84.74 Increased By ▲ 1.29 (1.55%)
BOP 6.24 Increased By ▲ 0.39 (6.67%)
CNERGY 5.69 Decreased By ▼ -0.16 (-2.74%)
EFERT 79.70 Decreased By ▼ -0.40 (-0.5%)
EPCL 65.58 Decreased By ▼ -1.71 (-2.54%)
FCCL 15.00 Decreased By ▼ -0.20 (-1.32%)
FFL 7.11 Increased By ▲ 0.07 (0.99%)
FLYNG 7.70 Decreased By ▼ -0.07 (-0.9%)
GGGL 11.70 Decreased By ▼ -0.20 (-1.68%)
GGL 17.39 Decreased By ▼ -0.26 (-1.47%)
GTECH 9.35 Increased By ▲ 0.17 (1.85%)
HUMNL 7.25 Increased By ▲ 0.05 (0.69%)
KEL 3.47 Decreased By ▼ -0.03 (-0.86%)
LOTCHEM 30.30 Decreased By ▼ -0.65 (-2.1%)
MLCF 28.40 Decreased By ▼ -0.12 (-0.42%)
OGDC 84.60 Decreased By ▼ -0.60 (-0.7%)
PAEL 16.99 Decreased By ▼ -0.12 (-0.7%)
PIBTL 6.13 Decreased By ▼ -0.02 (-0.33%)
PRL 19.49 Decreased By ▼ -0.35 (-1.76%)
SILK 1.29 No Change ▼ 0.00 (0%)
TELE 12.07 Increased By ▲ 0.02 (0.17%)
TPL 9.15 Decreased By ▼ -0.01 (-0.11%)
TPLP 20.20 Increased By ▲ 0.01 (0.05%)
TREET 26.99 Decreased By ▼ -0.11 (-0.41%)
TRG 96.86 Decreased By ▼ -0.44 (-0.45%)
UNITY 23.02 Increased By ▲ 0.19 (0.83%)
WAVES 13.30 Increased By ▲ 0.01 (0.08%)
WTL 1.46 Increased By ▲ 0.01 (0.69%)
BR100 4,338 Decreased By -23.6 (-0.54%)
BR30 15,953 Decreased By -55.9 (-0.35%)
KSE100 43,274 Decreased By -207.5 (-0.48%)
KSE30 16,389 Decreased By -86.8 (-0.53%)

LONDON: Eurozone equity markets sank Tuesday on news that the region’s inflation rate has spiked to another record high in May on fallout from Russia’s invasion of Ukraine.

The eurozone’s increase in consumer prices hit 8.1 percent, up from 7.4 percent in April, official data showed Tuesday, with energy surging the fastest.

Sentiment took another battering on fears of harsh economic fallout after the European Union reached a deal on a partial embargo of Russian oil imports in punishment for its assault on Ukraine.

The embargo also sent oil prices spiking to two-month peaks, in turn fuelling more inflationary fears and pressuring central banks to tighten monetary policy and prevent consumer prices rocketing even higher.

However, the resurgent oil market lifted the London stock market because it boosts profits and revenues for energy majors BP and Shell.

Energy ‘may soar faster’

“Inflation in the eurozone increased even further,” said Jonas Keck, economist at UK-based research group the Centre for Economics and Business Research.

“As the EU reached an agreement on new sanctions targeting Russian oil supplies, energy prices may well soar even faster in the coming months.”

Markets have been rocked this year as the Ukraine conflict has fuelled massive price gains for energy and food, translating into spiking inflation that threatens to derail the post-pandemic economic recovery.

Red-hot eurozone inflation intensified calls for interest rate hikes from the European Central Bank (ECB), which has already flagged plans to hike borrowing costs in July.

European shares rise

“Over recent months, the ECB has faced growing pressure to shift away from its pandemic stimulus position, which has seen it hold its main policy rates at their current historic lows,” added Keck.

“This stands in contrast to other major central banks including the US Federal Reserve and Bank of England, both of which have seen at least two rate rises this year.”

With Wall Street closed for a holiday on Monday, there were few catalysts to help extend the gains enjoyed in recent days, allowing inflation and borrowing costs to take centre stage.

Brent oil tops $124

In reaction to the EU’s partial embargo, Brent oil briefly broke above $124 per barrel and WTI crude breached $119.

European chiefs said the latest sanctions would ban purchases of Russian oil delivered by sea, though there would be a temporary exemption for pipelines.

While widely expected, the agreement adds further upside to crude just as China begins to ease Covid restrictions in Shanghai and Beijing, raising the likelihood of a jump in demand from the world’s number two economy.

There was some much-needed cheer from data showing China’s manufacturing shrunk in May at a slower rate than expected.

The Purchasing Managers’ Index (PMI) – a key gauge of manufacturing activity – hit 49.6 last month, improving from April’s 47.4, which was the worst reading since early 2020.

However, it remained below the 50-point mark separating growth from contraction and showed the Chinese economy was still struggling.

Key figures at around 1115 GMT

Frankfurt - DAX: DOWN 0.8 percent at 14,462.95

Paris - CAC 40: DOWN 1.0 percent at 6,500.16

EURO STOXX 50: DOWN 0.8 percent at 3,810.35

London - FTSE 100: UP 0.2 percent at 7,618.33 points

Brent North Sea crude: UP 1.7 percent at $123.78 per barrel

West Texas Intermediate: UP 3.1 percent at $118.65

Tokyo - Nikkei 225: DOWN 0.3 percent at 27,279.80 (close)

Hong Kong - Hang Seng Index: UP 1.4 percent at 21,415.20 (close)

Shanghai - Composite: UP 1.2 percent at 3,186.43 (close)

New York - Dow: Closed for a holiday

Euro/dollar: DOWN at $1.0698 from $1.0779 on Monday

Pound/dollar: DOWN at $1.2590 from $1.2652

Euro/pound: DOWN at 84.99 pence from 85.20 pence

Dollar/yen: UP at 128.01 yen from 127.59 yen

Comments

Comments are closed.