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European markets open lower amid China data, UK Covid cases


The Stoxx 600 index dropped 0.03% as investors kept an eye on an ECB policy decision and US inflation data

European markets opened Wednesday’s session slightly lower as China inflation data and an increasing number of UK Covid cases kept a lid on sentiment.

The pan-European Stoxx 600 index dropped 0.03% as investors also kept an eye on a European Central Bank (ECB) policy decision and US inflation data later this week.

China’s producer price index (PPI) for May climbed 9% from a year earlier, against expectations of an 8.5% rise. The country’s Consumer Price Index (CPI) in May increased 1.3% from a year earlier, lower than an expected 1.6% rise.

While some of the PPI rise can be attributed to base effects due to the huge slide in commodity prices that we saw in March and April last year which saw PPI decline -3.7%, there is increasing evidence that various supply side issues are starting to create a situation where rather than being transitory, inflation pressures could become more persistent, said CMC Markets analyst Michael Hewson.

It is certainly something Chinese business is becoming more concerned about, along with Chinese authorities given recent steps to curb the recent sharp rise in commodity prices, he said.

In equities, shares in travel food outlet operator SSP Group increased 1.8% after the company reported wider interim losses due to the pandemic, but said trading in the UK and North America had improved since the end of March as vaccine rollouts accelerated.

Airlines were also higher after the US CDC said it was easing travel recommendations on 110 countries and territories. Air France KLM, Lufthansa and British Airways-owner IAG all posted gains, as did Aeroports de Paris and Fraport.

Artificial hip and knee maker Smith & Nephew gained nearly 4% after an upgrade to ‘outperform’ at Credit Suisse.

Spanish retail giant Inditex advanced 1.3% after reporting a forecast-busting first-quarter net profit of €421m ($513.14m).

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