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European stock markets saw a modest retreat on Tuesday as investors absorbed corporate earnings updates and awaited the release of the latest US inflation reports.
At 03:15 ET (07:15 GMT), Germany’s DAX index traded 0.1% lower, and France’s CAC 40 slipped 0.1%, while the UK’s FTSE 100 gained 0.1%.
Despite reaching all-time highs last Friday, European markets are now consolidating near record levels, with both the UK’s FTSE 100 and Europe’s STOXX 600 index achieving historic highs.
Traders in Europe are exercising caution, with the main indices expected to trade within narrow ranges ahead of the crucial inflation data scheduled for Tuesday and Wednesday.
The US producer price index for April is set to be released later in the session, followed by the consumer price index on Wednesday. Investors are keenly observing these reports for signs that inflationary pressures may be abating, following months of elevated inflation that raised concerns about potential interest rate hikes by the Federal Reserve.
In Europe, recent data from Germany’s consumer prices indicates that inflation remains under control in the eurozone’s largest economy, with the annual figure for April confirmed at just 2.2%.
However, the UK saw less encouraging news, as average earnings (excluding bonuses) remained at 6.0% in March, suggesting that wage-driven inflation could pose challenges for the Bank of England as it considers the possibility of interest rate cuts. Additionally, UK unemployment rose to 4.3% in the three months to March, up slightly from the previous period.
In the corporate sector, Bayer stock rose over 2% after reporting a 1.3% decline in adjusted earnings for the first quarter, surpassing analysts’ expectations.
Vodafone stock edged higher despite a 75% drop in operating profit for the 12 months ending in March, as the telecom giant adjusted its presence in Europe through divestments and plans for a merger with Three in the UK.
On the other hand, BHP Group stock declined by 0.5% after Anglo American rejected its takeover offer once again, stating that the improved proposal undervalued the company. BHP is expected to consider revising its $43 billion bid for Anglo American.
