Europe’s STOXX 600 falls for seventh day; U.S. CPI data eyed

Europe’s STOXX 600 index fell for a seventh day on Thursday, dragged by technology and real estate stocks, with investors focused solely on U.S. inflation data due later in the day to gauge the Federal Reserve’s rate-hike trajectory.

The region-wide index was down 0.5 percent by 0810 GMT, and on pace for its longest losing streak since early February 2018, if losses hold.

The index has fallen nearly 4.3 percent in the last six days, with markets worried about central banks’ aggressive policy moves to tackle high inflation and recent warnings from the International Monetary Fund and the World Bank about a recession.

Latest data confirmed German harmonised inflation was +10.9 percent y/y in September, while consumer prices (CPI) in Sweden, measured with a fixed interest rate, rose 1.1 percent from August.

All eyes are on U.S. CPI data due at 1230 GMT.

Minutes of the U.S. Fed’s last meeting showed many officials “emphasized the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action”.

“There is nervousness ahead of the U.S. CPI data, particularly given the Fed minutes yesterday showing policymakers are hyper focused on bringing down inflation with the warning higher rates will linger for longer,” said Susannah Streeter, senior investment and market analyst, Hargreaves Lansdown.

London’s FTSE 100 slipped 0.5 percent amid heightened concerns around British Prime Minister Liz Truss’s economic plans and the bond market turmoil it sparked that has pushed the Bank of England to intervene.

And with third-quarter earnings season on the horizon, investors are now focussed on how the management at corporate Europe projects earnings outlook at a time when continent-wide inflation is at a record high and a recession is foreseen.

“The effects of inflation and expected economic contractions on shoppers caution are expected to continue to weigh on consumer discretionary stocks, particularly retail, travel and hospitality,” Streeter said.

“Rising COVID rates in China show the pandemic isn’t fully in the rear view mirror and a fresh front breaking out in the U.S.-China ‘chip wars’ also risks fresh supply chain woes particularly for the tech and motor manufacturing sectors.”

European semiconductor companies fell after chip-making technology supplier Applied Materials Inc said export restrictions to China would result in a $250 million-$550 million loss in net sales in the quarter ending Oct. 30, with a similar impact expected in the following three months.

Shares of Infineon, ASML, ASMI, BESI and Aixtron slid between 1.2 percent and 3.2 percent.

Aroundtown slid 6.3 percent after Citigroup downgraded the real estate group’s stock to “neutral” from “buy”.

British homebuilder Taylor Wimpey lost 5.2 percent as it traded ex-dividend.

Norwegian aluminium producer Norsk Hydro jumped 5.6 percent after reports that the United States was weighing restricting imports of Russian aluminium.