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  • Writer's pictureanalysiswatch

Title: European Stock Futures Edge Higher; U.K. Inflation Hits 40-Year High

May 18, 2022 02:04AM ET

By: AnalysisWatch

European stock markets are expected to open marginally higher on Wednesday, struggling to maintain the week's positive momentum as inflation data from the U.K. raises concerns about interest rate hikes and slowing growth.

At 2:05 AM ET, DAX futures in Germany were trading 0.3% higher; CAC 40 futures in France climbed 0.3%; and FTSE 100 futures in the U.K. rose 0.2%.

European stocks closed sharply higher Tuesday, led by the DAX, which gained 1.6%, as investors searched for bargains after these indexes were hit hard the previous week on fears that higher interest rates to fight inflation, COVID locks in China and the war in Ukraine could plunge the region into recession.

However, data released early Wednesday from the United Kingdom showed that consumer inflation hit a 40-year high, rising 9.0% year-over-year and as much as 2.5% month-over-month in April.

Deputy Governor Dave Ramsden said last week that the central bank would have to raise interest rates further to tackle rising prices, and there was a risk that the worst inflation crisis in the U.K. in decades would take longer to fully ease.

The consumer price index is expected to be 7.5% in April, increasing the likelihood that the European Central Bank will raise interest rates by 25 basis points in the summer.

Klaas Knot, a member of the European Central Bank's Governing Council, was the first eurozone official to hint at a possible half-point rate hike if inflation risks worsen, although he favored a smaller move for now.

In the corporate sector, ABN AMRO reported a first-quarter net income of 295 million euros, above market expectations, helped by the reopening of the Dutch company after pandemic restrictions were lifted.

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