By Peter Nurse
Investing.com - European stock markets edged lower Thursday, continuing the previous session’s losses as the latest U.S. inflation report lifted the chances of more monetary tightening, weighing on global economic growth.
By 3:50 AM ET (0750 GMT), the DAX in Germany traded 0.2% lower, the CAC 40 in France fell 0.5%, and the U.K.’s FTSE 100 dropped 0.3%.
The main European indices closed lower Wednesday after consumer inflation in the U.S. leaped to a new four-decade high of 9.1% in June, piling further pressure on the Federal Reserve to increase interest rates once more.
The U.S. central bank raised its benchmark interest rates by 75 basis points in June, its biggest rate hike since 1994, and this reading is likely to mean another hike of a similar hefty amount later this month, potentially pushing the U.S. economy, the main global growth driver, into recession.
Additionally, this presents a dilemma for the European Central Bank as the euro falls close to parity against the dollar in the face of tightening U.S. monetary policy. The weak currency runs the risk of pushing up already record-high inflation, or the ECB could respond with its own version of rapid interest rate hikes increasing the pressure on an economy already hit hard by high energy costs.
In corporate news, Ericsson (ST:ERICa) stock fell over 10% after the Swedish maker of telecoms network equipment reported that a sharp rise in the cost of rolling out 5G telecom networks ate into its profit margins in the second quarter.
Staying in the telecoms sector, Deutsche Telekom (ETR:DTEGn) stock fell 2% after announcing earlier Thursday that it would sell 51% of its tower business to a consortium.
Experian (LON:EXPN) stock gained 1.7% after the credit reporting company reported higher first quarter total revenue, benefiting from robust demand mainly in North America.
Aker Solutions (OL:AKSOA) stock rose 8.4% after the Norwegian oil services firm raised its 2022 revenue outlook as it sees increased activity from oil and gas companies, while Kone (HE:KNEBV) stock fell 0.3% after the Finnish elevator maker lowered its sales and profit outlook for this year.
Later in the session, quarterly earnings from major U.S. banks JPMorgan Chase (NYSE:JPM) and Morgan Stanley (NYSE:MS) will be the highlight of the U.S. session.
Oil prices edged lower Thursday, with the red-hot inflation numbers and U.S. government data showing the largest weekly fuel stockpiles build since January weighing.
Wednesday’s U.S. crude supply data from the U.S. Energy Information Administration showed a build of 3.254 million barrels for the week ended July 8, bolstered by another big release from strategic reserves.
Oil prices have tumbled in the past two weeks on recession concerns, falling through $100 a barrel on Tuesday for the first time since April.
By 3:50 AM ET, U.S. crude futures traded 0.8% lower at $95.52 a barrel, while the Brent contract fell 0.6% to $99.00.
Additionally, gold futures fell 1.1% to $1,716.70/oz, while EUR/USD traded 0.2% lower at 1.0041.