European Stocks Subdued with Focus on Earnings and US Inflation
European stocks were subdued on Monday as investors focused on corporate earnings and the potential for higher US inflation. The Stoxx Europe 600 Index was little changed, with a slight 0.1% decline.
Earnings Season
The earnings season is in full swing, with companies from all sectors reporting their results. Investors are looking for signs of a recovery from the pandemic-induced recession.
In the UK, shares of Barclays Plc rose 1.7% after the bank reported a better-than-expected first-quarter profit. In France, shares of BNP Paribas SA rose 1.2% after the bank reported a jump in first-quarter profit.
US Inflation
The focus of investors is also on the potential for higher US inflation. The US Labor Department is due to release its consumer price index for April on Tuesday.
Economists expect the report to show that inflation rose by 0.4% in April, compared to a 0.2% increase in March. If the report shows a larger-than-expected increase, it could spark a sell-off in stocks as investors worry about the potential for higher interest rates.
Sectors
The Stoxx Europe 600 Index was little changed, with a slight 0.1% decline. The index was weighed down by losses in the consumer discretionary and technology sectors.
Shares of luxury goods maker LVMH Moet Hennessy Louis Vuitton SE fell 1.3%, while shares of software maker SAP SE dropped 1.2%.
Currencies
The euro was little changed against the US dollar, trading at $1.21. The British pound was also little changed, trading at $1.41.
Commodities
Oil prices were higher, with Brent crude trading at $68.20 a barrel. Gold prices were also higher, trading at $1,872 an ounce.
Outlook
European stocks are likely to remain subdued in the near term as investors focus on corporate earnings and the potential for higher US inflation. If the US consumer price index report shows a larger-than-expected increase, it could spark a sell-off in stocks as investors worry about the potential for higher interest rates.
In the longer term, investors will be looking for signs of a recovery from the pandemic-induced recession. If corporate earnings continue to beat expectations, it could provide a boost to European stocks.