European Shares Set for Careful Open; Inflation Data

The hot German inflation rate raised concerns about central banks’ pace of monetary tightening. Hence, European shares will slowly open on Tuesday. The FTSE 100 was down about 4 points to 7,596. The DAX will open 51 points lower at 14,525. CAC 40 dropped by about 18 points to 6,544.

New data on Monday showed that Germany’s harmonized inflation with the E.U. reached 8.7% per annum in May. This significantly exceeds analysts’ expectations of 8.0%, Sharply higher than the 7.8% recorded in April. Impressions of early inflation from May will come from Italy, France and the broader eurozone on Tuesday. Investors will pay close attention to the speed and scale of interest rate hikes guidelines, which the European Central Bank may request from July.

Global markets are also reacting to another rise in oil prices; E.U. leaders agreed late Monday to ban 90% of Russian oil by the end of the year, As the bloc’s sixth package of sanctions against Moscow after it invaded Ukraine.

Asia-Pacific stocks were mixed on Tuesday. The data showed that China’s manufacturing activity continued to decline again amid the country’s COVID-19 shutdown in May; however, at a slower pace, indicating some progress toward normalization. Based on last week’s momentum, U.S. stock futures rose early in pre-market trading; Wall Street closed on Monday for the Memorial Day celebration.

Asian Shares and Inflation

Asian shares were mixed on Tuesday; Since reports have shown that the slowdown in Chinese production is moderating; antivirus restrictions on businesses in Shanghai and Beijing have been eased. The oil price approached $120 a barrel; After the E.U. leaders reached an agreement on an embargo on most of the Russian oil in the bloc by the end of the year.

The pact, part of new sanctions on Moscow, was drafted at a summit focused on a long-delayed package of new financial support for Ukraine. The embargo contains Russian oil imported by sea. This allows for temporary relief for imports supplied by pipelines. It was crucial for landlocked Hungary to make a decision that required consensus.

The price of U.S. crude oil in electronic trading on the New York Mercantile Exchange rose to 118.50 dollars. It increased to $115.07 a barrel, by 98 cents. The price of Brent oil, used as a basis for international trade, increased from $1.56 to $119.18 per barrel. China’s easing of antivirus restrictions on businesses in Shanghai and Beijing has raised hopes; Of more robust growth in the world’s second-largest economy.

An official study showed that plant activity increased in May; However still below the 50 levels, indicating an expansion to the 100 scale. The PMI rose to 49.6. A report by Capital Economics says they probably do not estimate the recovery scale this month. The studies were mainly conducted before most of the restrictions in Shanghai were eased. It is unlikely that the heavy data available in the coming weeks will reveal a more robust recovery. More factories, shops and other businesses will open in Shanghai and Beijing this week.

Conclusion

The Shanghai Composite Index rose to 3,174.42. Hang Seng added 1% to a total of 21.332.72. The Nikkei 225 lost 0.3% to 27,279.80. While Kospi rose 0.5% to 2.683.65. The S&P/ASX 200 lost 0.7%. Stocks gained in Taiwan but lowered in India.

The Wall Street S&P 500 Index was up 0.2%; Since Friday, the benchmark ended the week at 6.6%. The Dow gained 0.1%. Investors calmed down; After data from the Department of Commerce showed that U.S. inflation slowed to 6.3% a year ago in April; The first drop in 17 months. Concerns remain, however, over whether the federation can control inflation, which is at a four-decade high, without turning into the most significant global economy in recession.

The price of crude oil has risen by 60% this year. Fears Russia, delaying supply to the second largest global exporter. The price of wheat increased by about 50%, while that of corn by 30%. The dollar rose to 127.87 Japanese yen late Monday. The euro fell to $1.0750.

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