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Consumers’ inflation expectations drop in euro area

Consumer inflation expectations in the eurozone have fallen sharply, which may provide some relief for the European Central Bank (ECB) as it looks to end its rate hiking cycle this summer. That news and a slightly better growth outlook for the global economy by the World Bank helped stock market indices to squeeze out slight gains on Tuesday.

Shane Strowmatt, LGT
Temps de lecture
5 minutes
euro banknotes
© Shutterstock

Inflation expectations in the eurozone fell rapidly in April, according to a survey conducted by the ECB. In April, consumers in the economic bloc expected prices to rise by 4.1% over the coming 12 months, a steep fall from the 5% expected just one month earlier. Over the next 3 years, consumers expect a 2.5% increase in prices. That figure is not far from the ECB’s 2% medium-term target and confirms the view held by many market participants that the ECB will likely end its rate hiking cycle in the coming months. The EuroStoxx 50 finished Tuesday up 0.05%.

In New York, markets just managed to squeeze out mild gains on Tuesday. The Dow Jones Industrial ended the day marginally higher at 33,573.28 points and the S&P 500 gained 0.24%, closing at 4,283.85 points. The tech-heavy Nasdaq-100 also just managed to finish in positive territory, up 0.01% at 14,558.09 points. Coinbase shares fell by 12.09% after the US Securities and Exchange commission (SEC) sued the cryptocurrency platform for allowing customers to trade unregistered securities on its exchange. A day earlier, the SEC sued the world’s largest crypto trading platform, Binance, on a broad set of allegations.

The world bank raised its growth forecast for the global economy slightly on Tuesday to 2.1% this year, up from its previous forecast made in January of 1.7%. The low growth figure is largely due to central banks’ rate hiking cycles, stubborn inflation in many countries and instability in the financial sector.

Stock markets in the Asia-Pacific region were mostly trading higher on Wednesday, despite disappointing Chinese trade data. Exports from the world’s second-largest economy dropped 7.5% in May, when compared with the same month a year earlier and imports fell 4.5%. Stock indices in mainland China were nevertheless trading slightly in positive territory with the Shanghai Composite 0.3% higher and the Shenzhen Component up 0.1%. Hong Kong's Hang Seng Index rose 1.36%. In Tokyo, the Nikkei 225 fell 1.24%, reversing the strong trend of the previous days. South Korea’s Kospi was trading up 0.3%. In Australia, the S&P/ASX200 was up slightly, despite the country announcing its weakest growth figure in 1.5 years for the first quarter at 2.3% growth.

Corporate news in focus: Annual figures from Voestalpine (07:30 CET), annual general meeting at Air France-KLM (14:30).

Economic data in focus: Swiss unemployment (07:45 CET), German industrial output (08:00), US trade balance (14:30), Bank of Canada interest rate decision (16:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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