European Stocks Retreat Ahead of ECB Meeting; EasyJet Slumps on Rights Issue

European stock markets weakened Thursday, with investors cautious ahead of a key meeting of the European Central Bank against a backdrop of rising inflation and slowing global growth.

September 09, 2021 - 03:07 PM 257 views

European Stocks Retreat Ahead of ECB Meeting; EasyJet Slumps on Rights Issue

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European stock markets weakened Thursday, with investors cautious ahead of a key meeting of the European Central Bank against a backdrop of rising inflation and slowing global growth.

At 3:50 AM ET (0750 GMT), the DAX in Germany traded 0.6% lower, the CAC 40 in France fell 0.6% and the U.K.’s FTSE 100 dropped 1.2%.

Equity markets globally are struggling to post further gains amid concerns that the recent delta-variant Covid-19 outbreaks will slow the economic recovery just as central banks gradually begin to withdraw monetary policy support to bring inflation back down.

Data from China earlier Thursday amply illustrated the issue, as the country’s factory gate inflation hit a 13-year high in August, with the producer price index rising 9.5% from a year earlier in August, driven by sharply rising raw materials prices.

With this in mind, the European Central Bank’s meeting is the main focus Thursday, with the central bank’s policy makers widely expected to announce a timeline to slow its massive bond-buying program.

In corporate news, EasyJet (LON:EZJ) stock fell over 10% after the budget airline announced plans to raise 1.2 billion pounds ($1.7 billion) in a rights issue to fund its pandemic recovery, and added it had recently rejected a takeover offer. 

On the flip side, Merck KGaA (DE:MRCG) stock climbed 2.2% after the German conglomerate lifted its growth forecast for its Life Science unit, a supplier of materials and lab gear for the biotech industry.

Additionally, Uniper (DE:UN01) stock climbed 0.9% to an all-time high. The German energy company is benefiting from European gas prices jumping to record levels on worries  over tight supplies heading into the winter heating season.

WM Morrison (LON:MRW) stock edged 0.2% higher despite the U.K. supermarket chain, which is in the middle of a takeover battle, reporting a 37% fall in first-half profit, hurt by Covid-19 costs.

Crude prices stabilized Thursday as the impact of Hurricane Ida on the output of the U.S. Gulf of Mexico region starts to fade.

Data from the American Petroleum Institute, released late Wednesday, showed that crude drawdown for the week ended Sept. 3 was smaller than expected at just under 3 million barrels, but U.S. gasoline stocks fell by a hefty 6.4 million barrels.

Official crude supply data from the U.S. Energy Information Administration are due later in the day.

By 3:50 AM ET, U.S. crude futures traded 0.2% lower at $69.14 a barrel, while the Brent contract fell 0.1% to $72.53. 

Additionally, gold futures fell 0.1% to $1,793.15/oz, while EUR/USD traded 0.1% higher at 1.1825.


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