European Stocks Steady, US CPI Eases Pressure Ahead of ECB Decision
European stocks moved relatively steadily at the close of trading on Wednesday (June 10th) after US inflation data provided some relief for investors. The Stoxx Europe 600 closed virtually unchanged, after falling as much as 1% earlier in the session.
Pressure eased after US core inflation in May rose less than expected. This data helped ease concerns that the Fed would need to act more aggressively, although the market remained cautious as energy inflation remains a key risk amid the US-Iran conflict.
Sector rotation was quite clear. Personal care, food, and beverage stocks were the main supporters because their defensive nature is more sought after when market sentiment is fragile. Conversely, cyclical sectors such as mining and automotive lagged behind because they are more sensitive to economic slowdowns, energy costs, and changes in interest rate expectations.
Previously, European markets had weakened when oil prices rose after US President Donald Trump stated that Iran "will have to pay a price" for delaying negotiations for too long. This statement rekindled concerns that Middle East tensions could prolong energy disruptions and keep inflation high.
Market focus now shifts to the European Central Bank's (ECB) policy decision on Thursday. The ECB is expected to raise interest rates for the first time since September 2023. If the central bank signals that this increase will be limited or a "one-off," defensive stocks, consumer staples, and bond proxies could potentially benefit from sentiment support.
At the issuer level, WH Smith fell 16% after the British retailer cut its profit outlook and announced a capital raising plan. The company cited the impact of the Iran war as weighing on sales, emphasizing that geopolitical conflict is starting to be felt directly on the performance of European corporations. (Arl)
Source: Newsmaker.id
