ALBAWABA – Stock markets in the European Union (EU) have seen a decline in some of the main indicators on Thursday, ahead of the European Central Bank’s decision on EU interest rates. Especially in the wake of the United States (US) Federal Reserve Board (Fed) warning of the likelihood of more interest rate hikes before the end of the year.
Fed officials announced pinning the current US interest rate, for now, but stated that the persistence of inflation and a strong labor market may force further hikes in the coming months.
According to Bloomberg, the Stoxx Europe 600 Index slipped 0.3 percent. Miners fell with base metals after data showing China’s economic activity weakening in May. Consumer products also fell as luxury shares declined.
Stocks and EU interest rates
Meanwhile, retail shares outperformed, led by gains in Hennes & Mauritz AB after the clothing seller’s statement saying June has got off to a strong start. Asos Plc also surged as much as 16 percent after returning to profit.
SoftwareOne Holding AG jumped about 20 percent after Bain Capital offered $3.2 billion in cash to take the company private, a bid the board said materially undervalues the business.
Legal & General Group Plc dropped as the UK insurer said António Simões will replace Nigel Wilson as CEO.
European stocks rallied in June on hopes that central banks could signal a pause in the pace of rate hikes.
“After some hawkish surprises by central banks like the Bank of Canada and the hawkish Fed dot plot, investors are a bit cautious ahead of the ECB meeting,” Ulrich Urbahn told Bloomberg, head of multi-asset strategy and research at Berenberg.
Urbahn said he doesn’t expect a surprise from the ECB, European Central Bank, in terms of rate hikes.
“However, the risk is clearly that Christine Lagarde will stress during her press conference that inflation-fighting remains in focus going forward,” he said.
According to Bloomberg, economists and markets expect the ECB to raise the deposit rate by a quarter point to 3.5 percent.
