European Stocks Slide After Hot UK Inflation Print
European stocks dropped on Monday as investors reacted to a hotter-than-expected inflation print in the UK and a selloff in the US. The Stoxx Europe 600 Index fell 0.7%, with all sectors in the red.
UK Inflation Print
The UK’s Office for National Statistics reported that the Consumer Price Index rose to 1.5% in April, up from 1.1% in March. This was higher than the 1.3% that economists had expected. The jump was driven by higher prices for clothing, furniture, and recreation and culture.
The higher-than-expected inflation print has raised concerns that the Bank of England may have to raise interest rates sooner than expected. This could put pressure on the UK economy, which is still recovering from the pandemic.
US Selloff
The selloff in the US was driven by a combination of rising bond yields and a weaker-than-expected jobs report. The US Labor Department reported that the economy added 266,000 jobs in April, which was lower than the 1 million jobs that economists had expected.
The weaker-than-expected jobs report has raised concerns that the US economy may not be as strong as previously thought. This has caused investors to take profits and move out of stocks and into bonds.
Impact on European Stocks
The combination of the hot UK inflation print and the US selloff has weighed on European stocks. The Stoxx Europe 600 Index is down more than 3% from its all-time high set earlier this month.
The selloff has been broad-based, with all sectors in the red. Banks, which are sensitive to changes in interest rates, have been particularly hard hit. The Stoxx Europe Banks Index is down more than 4%.
Impact on Currencies
The selloff in European stocks has also weighed on the euro. The currency is down more than 1% against the US dollar. The British pound has also weakened, falling more than 0.5% against the US dollar.
Outlook
It remains to be seen how long the selloff in European stocks will last. The UK inflation print and the US jobs report have raised concerns about the strength of the global economy. If these concerns persist, it could weigh on European stocks in the near term.
However, the European Central Bank is expected to continue its accommodative monetary policy, which could provide some support for European stocks. In addition, the global economy is expected to continue to recover from the pandemic, which could provide a boost to European stocks.