European stocks slip as inflation falls, UK election nerves set in – MarketWatch

This post was originally published on this site

European stock markets mostly headed lower on Wednesday, as investors digested the latest bout of uncertainty surrounding the U.K. election and assessed a sharper-than-expected fall in eurozone inflation.

The Stoxx Europe 600 index SXXP, -0.02%  edged down 0.1% to 390.24, setting it on track for a fifth straight session of losses. The benchmark on Tuesday fell 0.2% as bank stocks declined on concerns over a potential early election in Italy.

For the month, the Stoxx 600 was still set to log a 0.8% gain.

“Markets are wilting slightly at the moment. There’s nothing sinister around, but it does feel like there is a slight loss of confidence as data momentum is stalling a touch and politics continues to be unpredictable,” said Jim Reid, strategist at Deutsche Bank, in a note.

Investors were watching the latest developments in the U.K. ahead of the country’s general election next week. A projection from YouGov, reported by the Times newspaper, indicated that the Conservatives might lose 20 seats in the June 8 vote. That means Prime Minister Theresa May’s party would lose its current majority in parliament, which it has had since the election in 2015.

The pound GBPUSD, -0.3188%  tanked to an intraday low of $1.2771 after the report, on concerns a hung parliament would make Brexit negotiations with Brussels more difficult. The weaker pound helped boost the globally-exposed FTSE 100 index UKX, +0.28%  , setting it on track for a new all-time closing high.

Other European indexes were more mixed. France’s CAC 40 PX1, -0.03%  fell 0.2% to 5,296.26, while Germany’s DAX 30 DAX, +0.09% was flat at 12,599.01.

Economic updates: Fresh factory data out of China did little to inspire investors, with the official purchasing managers index for May coming in unchanged at 51.2.

In Europe, Germany’s unemployment rate fell to a new low of 5.7% in May, from 5.8% in April.

Eurozone inflation for May slid to 1.4% from 1.9% in April, missing forecasts of a 1.5% reading. Meanwhile, unemployment in the currency area dropped to 9.3% in April from 9.4% in March. Analysts had expected the joblessness rate to stay at 9.4%, according to FactSet.

The euro EURUSD, +0.0536%  was largely unmoved after the reports, fetching $1.1179, compared with $1.1178 ahead of the data. The shared currency bought $1.1187 late Tuesday in New York.

Movers: Shares of Ericsson AB ERICB, +4.53% ERIC, +2.86%  jumped 4.7% after reports activist investor Cevian Capital has bought a $1 billion stake in the Swedish telecom-equipment maker.

Shares of Metro AG MEO, -2.41%  lost 2.5% after the German retailer said it swung to an operating loss in second quarter.

Shares of Tesco PLC TSCO, -0.78% TSCDY, -0.49%  gave up 1.3% after the latest Kantar data on U.K. supermarkets showed the grocer’s market share fell to 27.8% in the 12 weeks to May 21, from 28.3%.

More from MarketWatch

More Coverage