European stocks mixed; weak U.K. economy dilutes positive sentiment

Investing.com - European stock markets traded in a mixed fashion Thursday as investors digested the softer-than-expected U.S. inflation data as well as weak U.K. growth data.

At 03:25 ET (07:25 GMT), the DAX index in Germany traded 0.1% lower, the FTSE 100 in the U.K. traded down 0.1%, while the CAC 40 in France rose 0.1%.

The main European stock indices posted healthy gains Wednesday after soft U.S. consumer inflation data raised hopes that July’s expected interest rate increase by the Federal Reserve could be the last in this tightening cycle.   

U.K. economy contracted in May

However, that optimism has been punctured, to a degree, Thursday after data showed that the U.K. economy contracted by 0.1% in May, hit by the impact of strikes and an extra bank holiday to mark the coronation of King Charles.

While this drop was less than the 0.3% expected, and should mean that the economy avoids a decline for the second quarter as a whole, the Bank of England is expected to continue tightening monetary policy with inflation at the highest level in the G7. This could make a recession in the second half of the year difficult to avoid.

Chinese trade data disappoints 

Also weighing on sentiment was the news out of China earlier Thursday, as data showed that the Asian giant’s exports shrank 12.4% on an annual basis in June, at their worst pace since March 2020, the height of the COVID-19 pandemic. 

Imports also fell 6.8% in June, falling at their fastest pace since March this year, and a much deeper contraction than the 4.5% seen in May. 

These numbers show how badly China’s reopened economy is stuttering, to the detriment of many of Europe’s major exporting companies.

Barry Callebaut reports a drop in sales

Barry Callebaut (SIX:BARN) stock fell 1.7%  after the world's biggest chocolate maker reported lower nine-month sales volumes than a year ago as customer demand dropped in an inflationary environment.

Oil edges higher; Chinese crude imports jumped in June

Oil prices rose slightly Thursday, hovering near three-month highs on the back of the softer-than-expected U.S. inflation data and strong Chinese monthly oil imports.

China's crude imports in June rose over 45% on the year, hitting its second-highest monthly figure on record, customs data released on Thursday showed, raising hopes of a recovery at the world’s second-largest economy and biggest crude importer. 

However, gains have been limited by an unexpected build in U.S. oil inventories, with the Energy Information Administration indicating that stocks grew 5.95 million barrels in the week to July 7, much more than forecast.

By 03:25 ET, the U.S. crude futures traded 0.2% higher at $75.90 a barrel, while the Brent contract climbed 0.3% to $80.34. 

Additionally, gold futures rose 0.2% to $1,965.10/oz, while EUR/USD traded 0.1% higher at 1.1141.