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European stocks lower; Italian industrial production disappoints

Published 2023-05-10, 05:18 a/m
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Investing.com - European stock markets edged lower Wednesday on signs of slowing growth ahead of the release of key U.S. inflation data while the earnings season continues.

At 04:55 ET (08:55 GMT), the DAX index in Germany traded 0.3% lower, the FTSE 100 in the U.K. dropped 0.2% and the CAC 40 in France fell 0.2%.

Data released earlier Wednesday showed that Italian industrial output fell 0.6% in March from February to register a third consecutive month of contraction.

This was far weaker than the 0.3% monthly rise expected, and follows last week’s closely watched survey which showed that the manufacturing sector in the eurozone’s third-largest economy shrank in April, ending three months of growth.

Added to this, German consumer prices rose 0.4% on the month in April, an annual increase of 7.2%, as prices remained elevated in the eurozone’s largest economy.

The European Central Bank raised interest rates once more last week, and more hikes are to be expected even as growth slows given inflation remains considerably above the central bank’s 2% target. 

Attention Wednesday, however, is on the release of the U.S. consumer price index, due later in the session, which is expected to show that the core index, which excludes volatile food and fuel prices, increased by 5.5% in April on a year-over-year basis, after a 5.6% increase a month earlier. 

The headline rate is expected to increase by 5% annually, suggesting inflation remains sticky, well above the Federal Reserve’s 2% annual target.

In corporate news, ABN Amro (AS:ABNd) stock rose 1.7% after the Dutch bank posted a 77% jump in first-quarter net profit, helped by rising interest rates and lower costs.

Alstom (EPA:ALSO) stock fell 5.2% after the French train maker delayed announcing its mid-term targets by one year due to high inflation.

Ryanair (NASDAQ:RYAAY) Holdings PLC (IR:RYA) stock rose 3.6% after the Irish airline won its challenge against Lufthansa's (ETR:LHAG) state bailout in 2020 triggered by the coronavirus pandemic, as Europe's second-top court cited errors in EU competition regulators' decision to approve the state aid.

Oil prices fell Wednesday after industry data pointed to an unexpected build in U.S. crude stocks, raising concerns over a possible fall in demand from the largest consumer in the world.

Data from the American Petroleum Institute, released Tuesday, indicated that U.S. crude inventories rose by about 3.6 million barrels in the week ended May 5, while gasoline stockpiles rose by just under 400,000 barrels.

Official numbers are due later in the session, and traders will also study the U.S. inflation numbers for clues about future Federal Reserve interest rate decisions.

By 04:55 ET, U.S. crude futures traded 1.5% lower at $72.59 a barrel, while the Brent contract dropped 1.5% to $76.30.

Additionally, gold futures fell 0.4% to $2,035.45/oz, while EUR/USD traded 0.1% lower at 1.0952.

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