Earthmeta Earthmeta

European Indices Inch Forward as Investors Digests Economic Realities

UTC by Godfrey Benjamin · 3 min read
European Indices Inch Forward as Investors Digests Economic Realities
Photo: Depositphotos

The growth in the European indices recorded an encompassing ripple effect that spread to other major Asia-Pacific markets.

Indices in the European stock market opened the week with promises of growth as economic realities for the near future became more visible. Besides, earnings from publicly traded firms have been seen to be a major catalyst in boosting sentiments as well as the expectations of monetary actions from the Bank of England (BoE) this week.

Effectively, the FTSE 100 Index (INDEXFTSE: UKX) inched upward by 0.98% to 7,778.38 on Friday. The index is closed today in honor of the coronation of King Charles III.

The French CAC 40 (INDEXEURO: PX1) added more than 13 points atop a 0.16% growth and it is pegged at 7,444.81 at the time of writing. The positive uptick being recorded remained encompassing as it spread to the German DAX PERFORMANCE-INDEX (INDEXDB: DAX) which added a negligible 12 points to 15,973.03.

The European Central Bank (ECB) hiked interest rate earlier this month by 25 basis points as it remains resolute about stemming inflation in the region. Some entities within the European Union are seeing impressive upticks in their share price as observed today. Italian commercial banking giant, Banca Monte dei Paschi di Siena SpA (BIT: BMPS) saw a 3.96% uptick in its share price on news that the government plans to reduce the 64% stake it has in the company.

The sort of autonomy the reduction will afford the financial institution has been tagged as a major catalyst that can help push up its price growth in the near future.

The growth in the European indices recorded an encompassing ripple effect that spread to other major Asia-Pacific markets. The only major difference is Japan as the Nikkei 225 (INDEXNIKKEI: NI225) dropped by 0.71% to 28,949.88

European Indices and the US Correlation

While each region pushes for its own monetary sovereignty in different ways, the European indices are taking a cue from their US counterparts as the Federal Reserve also hiked its interest rate by the same percentage points as the ECB last week.

The US rate hike came in as the 10th consecutive hike and there seems to be speculations around hitting a pivot in the near term. Inflation was last pegged at 5% in the US but the target is around 2% per annum. While achieving this low inflation rate is possible, many market observers are now more concerned about the impact of the incessant rate hikes on the economy.

The fear of recession supersedes this thought while the impact on the primary industries including the financial ecosystem is also a significant worry in the US. From March to date, about 4 banks in the US have collapsed with the latest, First Republic Bank (OTCMKTS: FRCB) being the biggest banking failure in more than 3 decades.

Though the Credit Suisse collapse and subsequent takeover by UBS Group AG (SWX: UBSG) is a ripple effect of the banking failures, the EU is considered largely immune to this onslaught in recent times.

Business News, Investors News, Market News, News, Stocks
Related Articles