Title: European Stocks Edge Lower; Caution Ahead of Crucial U.S. CPI Release

Aug 09, 2022 03:38AM ET

By: AnalysisWatch

European stock markets fell on Tuesday in cautious trading ahead of the release of key US inflation data as well as rising geopolitical tensions.

By 03:40 GMT, Germany's DAX was trading 0.3% lower, France's CAC 40 was down 0.1%, and Britain's FTSE 100 was almost unchanged.

Stock indexes in Europe have rallied in recent sessions, helped by generally positive corporate earnings as well as hopes that the Federal Reserve will soon become less aggressive in raising interest rates as the U.S. economy, the world's largest, enters a technical recession.

The drop in inflation could be a sign that the economy is cooling enough for the Fed to reduce its current pace of tightening. On Wednesday, the U.S. consumer price index is expected to come in at 8.7 percent for July, down slightly from 9.1 percent the previous month.

Also prompting caution on Tuesday were rising geopolitical tensions, with the conflict between Russia and Ukraine leading to the shelling of Europe's largest nuclear power plant.

In addition, Taiwan's foreign minister said earlier on Tuesday that China was using the military exercises, which it launched in protest at a visit by US House Speaker Nancy Pelosi, as a pretext to prepare for an invasion of the island.

Such a move would have a serious impact on relations between the world's two economic superpowers.

In corporate news, shares of Munich Re fell 0.4 percent after the reinsurer dealt a nearly $1 billion blow to its investment portfolio in a volatile second quarter for financial markets.

InterContinental Hotels shares fell 1.3 percent despite the company's announcement of a $500 million share repurchase program and the reinstatement of an interim dividend after its half-year profit more than doubled due to a robust post-pandemic travel recovery.

Dufry shares rose 3.4 percent after the Swiss duty-free retailer reported that sales momentum remained strong in July despite rising inflation, and that turnover more than doubled in the first half of the year.