Investors digest U.S. inflation data for April

LONDON — European stocks fell sharply on Thursday as global markets digested the latest inflation reading out of the United States. The reading has sparked concerns that a path of aggressive rate hiking lies ahead.

The pan-European Stoxx 600 index dropped 2.2% in early trade, with basic resources falling 3.5% to lead losses as all sectors and major bourses slide into negative territory.

Global investors are digesting the April inflation reading from the US, which showed the consumer price index surged 8.3% in April as compared with a year ago. The inflation rate was higher than expected and still running close to a 40-year high of 8.5%.

Analysts are mixed on whether the data suggests inflation has hit a peak.

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The April reading, which represented a slight ease from March’s peak, was also above the Dow Jones estimate for a 8.1% gain. Shares on Wall Street dropped following the data and markets in Asia-Pacific declined in Thursday morning trade following the losses stateside.

US stock futures were slightly lower Thursday morning as investors look ahead to the latest US data on jobless claims and the producer price index, which measures prices at the wholesale level.

In Europe, earnings came from Veolia, Bouygues, Aegon, Allianz, Commerzbank, RWE, Siemens and Zurich Insurance.

In terms of individual share price movement, BMW shares slid more than 9% in early deals as they traded ex-dividend, while British financial services company Hargreaves Lansdown also fell 7.6% after its trading statement.

Siemens shares dropped 5.8% after the German giant’s net income halved to 1.21 billion euros ($1.27 billion) in the first quarter as it suffered a 600 million euro hit from charges and impairments associated with Russia.

The UK economy shrank by 0.1% in March but expanded by 0.8% for the first quarter of 2022 as a whole, official figures showed on Thursday, missing consensus forecasts and signaling that the worst is yet to come as the country’s escalating cost-of- living crisis bites.

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