12/12/2023 – 13:54
European stock markets closed with a marginal drop this Tuesday, 12th, after losing momentum throughout the day following the release of US consumer inflation (CPI) and on the eve of the Federal Reserve's decision (Fed, the central bank North American), in a week in which the European Central Bank (ECB) and the Bank of England (BoE) also publish interest rate decisions.
In London, the FTSE 100 fell 0.03% to 7,542.77 points, while the DAX index, in Frankfurt, closed with a marginal drop of 0.02%, to 16,791.74 points. The CAC 40, in Paris, dropped 0.11%, to 7,543.55 points, and the FTSE MIB, in Milan, closed down 0.28%, to 30,342.15 points. In Madrid, the Ibex 35 index fell 0.80%, to 10,116.20 points. On the Lisbon Stock Exchange, the PSI 20 fell 1.23%, to 6,427.78 points. Quotes are preliminary.
The London Stock Exchange received an extra boost after the UK unemployment rate remained unchanged at 4.2%, reinforcing bets that the BoE could cut interest rates sooner than expected in 2024, and this set the tone for the British market early in the morning. Danni Hewson, head of financial analysis at AJ Bell, assesses that if the next UK employment data follows the current pattern, the market could receive cuts much earlier than imagined, but he highlights that the mood on Tuesday was still of caution.
Hewson assesses that Wednesday's Fed decision, despite keeping rates unchanged, may not please investors, “who want to see the Fed move”, signaling possible more dovish decisions in the future. While waiting for the decision, the indices remained close to stability, also after the US CPI showed an increase in inflation of 0.1% per month, when analysts consulted by FactSet expected stability.
The FTSE 100 index was also hurt by investment company shares, which fell after the country's regulator issued a notice about fees charged by managers. After the news, AJ Bell's shares fell 3.47% and Hargreaves Lansdown's shares fell 6.48%. Investors also monitored AstraZeneca shares this Tuesday, which rose 0.65% after the pharmaceutical company announced that it would buy Icosavax for more than US$1.1 billion.
Meanwhile, in Germany, the ZEW index of economic expectations advanced much more than expected, rising to 12.8 in December, while a decline was expected. BBH points out that the advance comes despite the current budget crisis in the country, with sentiment being strengthened mainly by the expectation of earlier cuts by the ECB, with an eye on Thursday's decision.
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