Europe close: Stocks rise as eurozone inflation cools
By Josh White
Date: Thursday 01 Jun 2023
(Sharecast News) - European shares closed in positive territory on Thursday, buoyed by falling inflation in the eurozone and encouraging economic data from China and Germany.
Markets were further supported by the US Congress' preliminary vote in favour of raising the federal debt ceiling overnight, which eased investors' concerns about a potential American fiscal crisis.
The pan-European Stoxx 600 closed up 0.78% at 455.27, with Germany's DAX leading the surge, finishing 1.21% higher at 15,853.66.
France's CAC 40 advanced 0.55% to 7,137.43, while the UK's FTSE 100 increased 0.59% to end the day at 7,490.27.
In currency markets, the euro was last 0.59% stronger on the dollar to trade at $1.0752, while it was 0.18% weaker against sterling to change hands at 85.76p.
"European markets have undergone a slow start to the month after yesterday's sell-off, as attention switches away from the US debt ceiling, and towards the broader economic outlook, and increasing evidence that inflation is slowing sharply," said CMC Markets chief market analyst Michael Hewson.
"The FTSE 100 has edged higher with a rebound in copper prices helping to support the miners."
Inflation decelerates in May, fresh China data boosts sentiment
On the economic front, the eurozone saw a deceleration in inflation in May according to a flash estimate released earlier.
Inflation came in at 6.1%, a decrease from the 7.0% registered in April.
The report from Eurostat pointed out that the principal factors driving inflation continued to be food, alcohol, and tobacco prices, which surged by 12.5%, albeit at a slower pace than the 13.5% increase reported in the preceding month.
Core inflation, which excludes the typically unstable food and energy prices, registered at 5.3% for May.
That marked a drop from April's 5.6% and fell slightly under the anticipated 5.5% predicted by analysts.
The rate of price growth for non-energy industrial goods slowed, with the annual increase standing at 5.8% in May, down from 6.2% in April.
Similarly, the inflation rate for services decreased to 5.0% from 5.2%.
Interestingly, energy prices exhibited a deflationary trend, dropping by 1.7% year-on-year in May, a stark reversal from the 2.4% rise observed in April.
"Looking ahead, we think headline inflation will fall further, but the core will rebound due to the base effects in services," said analysts at Pantheon Macroeconomics.
"The underlying trend in core inflation, however, is now falling, gently.
"We continue to think that these numbers will help to drive a shift in the European Central Bank's communication over the summer, paving the way for a final hike in July."
Meanwhile, the Chinese economy displayed promising signs of resilience as factory activity unexpectedly rebounded into growth territory in May, as per a private sector survey.
The Caixin/S&P Global manufacturing purchasing managers' index (PMI) advanced to 50.9 in May from 49.5 in the prior month, surpassing expectations.
A PMI reading above 50 indicates growth in the sector.
The development contrasted with the official PMI report released earlier in the week, which hinted at a slowdown in the Chinese recovery.
Beijing's official manufacturing PMI for May dropped to 48.8 from 49.2 in April, marking the lowest point since December when China rolled back most of its pandemic restrictions.
Dr. Martens tumbles, retail sector rises across continent
In equity markets, Dr. Martens tumbled 11.71% after the bootmaker reported a drop in annual earnings and issued a warning of shrinking margins.
The food sector was also in focus, with drinks maker Remy Cointreau and online grocer Ocado Group seeing significant losses.
Remy Cointreau saw a 5.01% decrease in its share price, while Ocado's stock took a 4.5% hit.
On the upside, retail stocks across Europe were on the rise, partly due to the newly-released inflation data.
Pharmacy chain DocMorris led the way with a 6.48% gain, closely followed by Polish grocer Dino Polska, which saw its stock rise by 6.22%.
Discount variety store chain B&M European Value Retail also joined the upward trend, enjoying a 3.84% increase by the close.
Reporting by Josh White for Sharecast.com.
STOXX EUROPE 600 +3.51 (+0.78%) 455.27
RISERS
Uniper SE +28.32% €
Idorsia +7.11% CHF 7.99
DocMorris NV +6.48% CNF 30.58
Dino Polska +6.22% PLN 442.00
CTS Eventim AG +5.64% €66.45
FALLERS
Dr. Martens -11.71% 138p
Orpea SA -6.52% €1.85
HelloFresh SE -6.25% €20.84
Remy Cointreau -5.01% €136.55
Ocado Group -4.5% 352.4p
DAX +189.64 (+1.21%) 15,853.66
RISERS
Commerzbank AG +2.85% €9.46
Airbus SE +2.76% €125.92
Hannover Rueck SE +2.6% €205.40
Sartorius AG +2.39% €321.00
Infineon Technologies +2.38% €35.56
FALLERS
Zalando SE -2.07% €26.48
Vonovia SE -1.17% €16.96
Adidas AG -0.5% €150.74
Bayer AG -0.46% €51.90
RWE AG -0.08% €39.09
CAC 40 +38.73 (+0.55%) 7,137.43
RISERS
Capgemini SE +3.07% €167.80
STMicroelectronics NV +2.89% €41.77
Airbus SE +2.77% €125.94
ArcelorMittal +2.54% €23.82
Thales SA +2.07% €133.00
FALLERS
EssilorLuxottica SA -1.09% €166.60
Eurofins Scientific SE -1.04% €61.00
LVMH Moet Hennessy Louis Vuitton SE -1% €805.80
Unibail-Rodamco-Westfield SE -0.86% €42.43
Sanofi SA -0.71% €94.21
FTSE 100 +44.13 (+0.59%) 7,490.27
RISERS
Polymetal International +5.41% 195p
Fresnillo +4.51% 677.2p
B&M European Value Retail +3.84% 529.4p
Melrose Industries +3.56% 488.4p
Anglo American +3.42% 2,299.5p
FALLERS
Evraz -12.59% 80.89p
Ocado Group -4.5% 352.4p
Auto Trader Group -3.4% 608.6p
National Grid -1.21% 1,055.5p
London Stock Exchange Group -1.08% 8,458p
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