European markets rose as investors braced for more inflation data this week, including the release of US consumer price data for December on Thursday.
Most major industries and stock markets reported gains, helping the pan-European Stoxx 600 Index rise 0.6%. The biggest gain was in retail stocks, up 1.7%, while insurance bucked the bullish trend and fell 1.1%.
To combat persistently high inflation, US Federal Reserve Chairman Jerome Powell on Tuesday stressed the importance of the institution being free from political influence. Powell pointed out that stabilizing prices requires making tough decisions that may be politically unpopular, a speech he delivered to the Swedish Riksbank. The French economy is holding up better than anticipated, so a “hard landing” must be avoided.
According to the Bank of France, the French economy likely expanded slightly in the fourth quarter of 2017 due to a rebound in business activity following the refinery strikes in October and the restart of more nuclear plants.
Following the UK insurer’s decision to cancel its final dividend for 2022, Direct Line’s shares fell 29%, setting the company up for its biggest one-day drop.
During bad weather in Britain in December, the company claimed that an increase in claims caused the insurer to record an annual underwriting loss. Vehicle repairs are now more expensive due to inflation and supply chain issues. Demand has increased due to unexpected hot and cold weather.
Increase in international shares
On Wednesday, international stocks rose marginally on expectations that inflation was being tamed enough to slow interest rate hikes and lessen the likelihood of a severe recession.
The dollar held steady as investors awaited Thursday’s Consumer Price Index (CPI) report. Still, gold hit an eight-month high on bets that it would reveal a slowdown in price increases.
While copper prices held near 6-1/2-month highs on optimism about the economic reopening of top consumer China, crude oil prices rebounded from early losses to rise.
