European Stocks Flopped Amidst Inflation Concerns

On Wednesday, May 19, European stocks flopped, succeeding in a global drop in stock markets on Tuesday amidst investors’ inflation concerns.

In front of more retail earnings, U.S. stock futures plunged in early premarket trading on Wednesday. At the same time, Asia Pacific stocks also slumped on the same day. Some markets were shut in the region for holidays.

The pan-European STOXX 600 index collapsed 1.1% initial trade. This is less than 2.1% under its all-time highs as all sectors and major markets traded in the red.

Euro-zone stocks perceived the pressure as the euro unhinged a four-month high, which makes exports more costly.

FTSE 100 sinked 0.82% at 6,976.42. Meanwhile, DAX and CAC 40 also sagged 1.08% at 15,218.24 and 0.79% at 6,303.17, respectively.

Investors are still anticipating the Federal Open Market Committee as it releases on Wednesday the minutes from its April meeting amidst concern about the rising inflation.

The meeting’s minutes could give more hints on the central bank’s decision. They might reveal when it will taper bond purchases. This action should arrive before it increases its interest rates.

On the front end, the Office of National Statistics said on Wednesday that the U.K. inflation rate more than doubled in April. Meanwhile, the consumer price jumped by 1.5% after a 0.7% tweak in March.

According to a senior economist, the consumer price index (CPI) inflation, at last, broke out of the 0.2% to 1.0% year-on-year range compared to its status since the pandemic started.

However, he added that even if the core CPI increased, it doesn’t mean that it will finally reflect the underlying domestic inflationary constraint.

KKR Aims to Buy U.K.’s John Laing Group

The British economy is still functioning under a pre-crisis level, and anticipation of upcoming inflation is reasonable. Although, when the economy reopens, it seems that some further price hike and inflation will likely happen at the end of the year.

Meanwhile, the private equity firm KKR announced that it aims to absorb the British infrastructure investment group John Laing (JLG). KKR agreed to buy JLG for £2 billion or $2.84 billion. Right after this, the latter’s shares rose to more than 11.0% in earlier deals to a 52-week high. It made John Laing the latest company from the United Kingdom private as London-listed companies hold a discount to international peers. This undermines the worth of staying public as private firms see a chance for pretty comebacks.