European stocks mixed on U.S., U.K. data

The DAX index in Germany traded down 0.1%, the FTSE 100 in the U.K. traded 0.1% lower, while the CAC 40 in France added 0.1%

European stock markets traded mixed on Thursday as investors digested the softer-than-expected U.S. inflation data and weak U.K. growth data.

At 03:25 07:25 GMT, the DAX index in Germany traded down 0.1%, the FTSE 100 in the U.K. traded 0.1% lower, while the CAC 40 in France added 0.1%.

The main European stock indices posted healthy gains Wednesday after soft U.S. CPI data raised hopes that July’s anticipated interest rate hike by the Federal Reserve could be the last in this tightening cycle.  

Nevertheless, that hope has been dashed, to a degree, Thursday as data showed that the U.K. economy declined by 0.1% in May, hit by the effect of strikes and an extra bank holiday to mark the coronation of King Charles.

While this decline was lower than the 0.3% anticipated, and should mean that the economy avoids a decline for Q2 as a whole, the BoE is expected to continue tightening monetary policy with inflation at the highest level in the G7 countries. This could make a recession in H2 2023 difficult to avoid.

Also weighing on sentiment was the news from China earlier Thursday, as data showed that the Asian giant’s exports dipped 12.4% on an annual basis in June, at their worst pace since March 2020, the peak of the pandemic.

Imports also dropped 6.8% in June, declining at their fastest pace since March this year, and a much sharper decline than the 4.5% seen in May.

These numbers show how badly China’s reopened economy is functioning, to the detriment of many of Europe’s leading exporting firms.

Barry Callebaut stock dropped 1.7%  after the world's largest chocolate maker reported lower nine-month sales volumes than a year ago as customer demand declined in an inflationary environment.