Europe close: Inflation worries see stocks reverse big early gains
By Alexander Bueso
Date: Thursday 05 May 2022
(Sharecast News) - European stocks reversed early sharp gains mirroring a similar move on Wall Street amid worries that the US central bank would eventually still be forced to act more forcefully.
Echoing the Federal Reserve's dilemma, on Thursday the Bank of England raised interest rates to their highest level since 2009 and warned that inflation would peak slightly above 10%.
The pan-European STOXX 600 index ended 0.70% lower at 438.26, alongside similar-sized falls for the region's other main equity benchmarks.
"It is not difficult to work out why stocks are edging down this afternoon," remarks IG chief market analyst Chris Beauchamp.
"The Fed's rate hike move might be broadly priced in, but markets are clearly nervous that an even more hawkish FOMC might prompt a surge in volatility that could push indices back below last week's lows."
US stocks had leapt higher in overnight trading after the Fed raised interest rates by 50 basis points and the central bank's Chairman, Jerome Powell, scotched suggestions of a 75 basis point hike at a coming meeting.
Brent crude oil futures were roughly flat but German Bund yields jumped eight basis points to 1.05% and euro/dollar fell 1.04% to 1.0512.
On the geopolitical side of things, Moscow pledged a three-day ceasefire so that civilians at the Azovstal steel works could be evacuated.
However, in remarks to state-owned news agency TASS, a Russian negotiator said that talks with Ukraine were "difficult" and accused Kyiv of rolling back previous agreements.
In equity news, shares in digital advertising firm S4Capital climbed 12% as the company said it would publish delayed results on Friday.
Airbus shares jumped after the aircraft maker reported higher-than-expected first-quarter profit and firmed up record plans for a 50% hike in narrow-body jet output.
Oil giant Shell dipped even after reporting a record first-quarter profit of $9.13bn, boosted by higher oil and gas prices which have been inflated due to the Ukraine war. The company also pledged more returns to shareholders.
BMW dropped 3% despite posting a rise in quarterly profit, lifted by a re-evaluation of its Chinese joint venture stake and strong pricing.
Shares in Hikma Pharmaceuticals plummeted as the company cut annual sales and margin forecasts for its second-biggest unit, due to possible delays in the launch of a generic version of a sleep disorder treatment.
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