By Peter Nurse
Investing.com – European stock markets weakened on Thursday as investors digested the latest searing US inflation release as celebratory trade statements shone the spotlight on the UK retail sector.
As of 04:00 ET (09:00 GMT), Germany traded down 0.2%, France fell 0.6% and Britain fell 0.2%.
Global markets are still eyeing the December US release, which posted the largest annual increase since 1982. The release cemented expectations of repeated interest rate hikes over the next 12 months, and followed the commitment of Federal Reserve Chairman Jerome Powell to rein in inflation without derailing the economic recovery in his renomination testimony on Capitol Hill earlier this week.
Back in Europe, a number of ECB policymakers are due to speak later on Thursday, but that central bank is not believed to be on the verge of raising interest rates due to differing market conditions. eurozone labor and the greater fragility of recoveries in countries such as Italy.
In business news, Britain’s retail sector took center stage on Thursday after a number of big players released trade statements that took into account the important holiday season.
Marks & Spencer (OTC:) shares fell 5% despite the British retailer raising its earnings outlook after reporting a strong Christmas performance. The group is recovering after a decade of decline, and its stock has nearly doubled in the past year.
Tesco (OTC:) shares fell 2.1% but remained close to their highest level since 2014, despite the UK’s biggest supermarket raising its profit forecast for the year whole, claiming its highest market share in four years.
On the other hand, ASOS (LON:) stock soared 6.4% after the online fashion retailer was able to reiterate its – admittedly already bleak – outlook despite supply chain issues which have plagued sales growth in the four months to the end of its year.
Elsewhere, Volkswagen (DE:) shares fell 1.7% after the German auto giant was forced to close two factories in the Chinese city of Tianjin due to recent Covid-19 outbreaks. Toyota has already suspended production at its Tianjin plant.
The coronavirus continues to affect life in Europe. Germany reported more than 80,000 coronavirus cases on Wednesday, a new daily record, prompting Chancellor Olaf Scholz to propose compulsory injections for all adults. Greece is set to extend some restrictions, Denmark is to offer a fourth vaccination to vulnerable citizens, while British Prime Minister Boris Johnson struggles to maintain his position after admitting he breached his own restrictions, claiming that he had not realized that a gathering of more than 40 people with drinks and snacks in his garden was a party (the invitation sent to more than 100 people by his private secretary had invited guests to bring their alcoholic beverages).
Oil prices stabilized after mixed data from the US Energy Information Administration. Wednesday’s release showed a drawdown of 4.5 million barrels last week, much larger than expected, with inventories at their lowest since October 2018. However, increased by 8 million barrels, suggesting that demand of fuel was hit by Omicron.
As of 4 a.m. ET, futures rose slightly to $82.67 a barrel, while the contract rose 0.1% to $84.76. Both contracts jumped more than 1% in the previous session.
Additionally, it fell 0.4% to $1,819.40 an ounce while trading up 0.2% to 1.1465, a two-month high.
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