European stocks lower as inflation concerns mount

By Peter Nurse 

Investing.com - European stock markets traded lower Tuesday after regional inflation data pointed to more interest rate increases from the European Central Bank, overshadowing any goodwill generated by the new trade deal between the U.K. and the European Union. 

At 03:45 ET (08:45 GMT), the DAX index in Germany traded 0.3% lower, the CAC 40 in France dropped 0.4% and the FTSE 100 in the U.K. fell 0.4%.

France and Spain both released hotter-than-expected consumer price data for February earlier this session, increasing the pressure on the European Central Bank to deliver more interest rate hikes, potentially weighing on growth in the region.

French consumer prices jumped 6.2% from a year ago, up from 6% in January, while the equivalent number in Spain rose to 6.1% year-on-year, a faster pace than the 5.9% during the 12 months to January.

Another 50-basis point rate hike at the ECB’s upcoming meeting in mid-March is widely expected, and the markets are currently pricing in another 75 basis points of moves in the Eurozone before the end of the summer.

This news has added to the downbeat mood among investors as markets become increasingly wary of a further rise in borrowing costs, not only in Europe but also in the U.S., the world’s major growth driver.

British Prime Minister Rishi Sunak announced late Monday that the U.K. has struck a deal with the European Union on post-Brexit trade rules for Northern Ireland on Monday, seeking to resolve the tensions caused by trading rules for the only part of the U.K. that has a land border with the EU.

In the corporate sector, Bayer (ETR:BAYGN) stock fell over 4% after the German pharmaceutical and biotechnology giant expects revenue and profit to fall this year, hurt by higher costs.

Ocado (LON:OCDO) stock slumped over 8% after the online grocer reported a worse-than-expected annual loss, suffering from rising living costs that led shoppers to rein in spending.

Santander (BME:SAN) stock rose 0.5% after the Spanish banking group revealed new profitability targets and pledged to return a bigger share of earnings to investors.

Oil prices edged higher Tuesday, but the benchmark contracts are still on course for monthly losses amid concerns further U.S. interest rate hikes will hit demand in the world's largest economy.

Attention later in the session will fall on the latest U.S. oil stocks data due from the American Petroleum Institute industry group, ahead of the official data from the Energy Information Administration on Wednesday for further clues on crude demand in the world’s largest consumer of energy.

By 03:45 ET, U.S. crude futures traded 0.8% higher at $76.28 a barrel, while the Brent contract rose 0.7% to $82.58. Both contracts are on course to drop over 4% this month.

Additionally, gold futures fell 0.5% to $1,816.15/oz, while EUR/USD traded 0.1% higher at 1.0614.