Latest news with #EuroSTOXX50
Yahoo
2 hours ago
- Business
- Yahoo
Eurozone inflation falls below ECB 2% target in May: Rate cut in sight
Inflation in the euro area cooled more than expected in May, bolstering expectations that the European Central Bank (ECB) will announce another interest rate cut at its meeting on Thursday. Annual consumer price growth slowed to 1.9% in May, down from 2.2% in April, according to a flash estimate from Eurostat. The figure came in below economists' forecast of 2%, and marks the first time inflation has dipped below the ECB's 2% target since September 2024. The decline in headline inflation suggests that business uncertainty, partly driven by renewed global trade tensions and soft consumer demand, is weighing on pricing power across sectors. Core inflation, which strips out volatile food and energy prices, also showed signs of easing. It slowed to 2.4% in May, from 2.7% in April, falling below expectations of 2.5%. On a monthly basis, core prices rose by just 0.1%. Among the main inflation components, food, alcohol and tobacco remained the strongest driver, rising 3.3% year-on-year, up from 3.0% in April. Services inflation, which had been particularly resilient, dropped sharply from 4.0% to 3.2%, contributing significantly to the broader deceleration. Non-energy industrial goods recorded a stable 0.6% annual increase, while energy prices continued their downward trajectory, declining by 3.6% compared to a year ago. On a monthly basis, overall inflation was flat, after a 0.6% rise in April, signalling a clear slowdown in momentum. The highest annual rates were recorded in Estonia (4.6%), Slovakia and Croatia (both 4.3%). France registered the lowest inflation, at just 0.6%, suggesting a stark divergence in price pressures among euro area members. Monthly inflation was highest in Portugal and Croatia, where prices rose 0.7% and 0.6%, respectively. By contrast, deflationary readings were observed in Belgium, Spain, France, Lithuania, the Netherlands, Austria and Slovenia. In a separate release, Eurostat reported that the euro area unemployment rate fell to 6.2% in May, down from 6.3% in March and 6.4% a year earlier. Market bets on ECB easing The euro lost ground against the dollar following the inflation print, dropping to $1.1400 as investors moved to fully price in a 25-basis-point cut to the ECB's deposit facility rate on Thursday. The cut would bring the deposit facility rate to 2.0%, its lowest level since January 2023. Eurozone sovereign bonds remained broadly. The yield on Germany's two-year bond, which is sensitive to ECB policy moves, traded at 1.77%. European equities edged lower on Tuesday morning, with the Euro STOXX 50 down 0.8%, after the OECD cut its global growth outlook, pointing to a slowdown fuelled by rising trade tensions. Orange, Société Générale and LVMH led losses, falling 3%, 1.9% and 1.6%, respectively. Deutsche Telekom gained 2%, emerging as the top performer among eurozone blue-chip stocks.
Yahoo
2 days ago
- Business
- Yahoo
Eurozone inflation falls below ECB 2% target in May: Rate cut in sight
Inflation in the euro area cooled more than expected in May, bolstering expectations that the European Central Bank (ECB) will announce another interest rate cut at its meeting on Thursday. Annual consumer price growth slowed to 1.9% in May, down from 2.2% in April, according to a flash estimate from Eurostat. The figure came in below economists' forecast of 2%, and marks the first time inflation has dipped below the ECB's 2% target since September 2024. The decline in headline inflation suggests that business uncertainty, partly driven by renewed global trade tensions and soft consumer demand, is weighing on pricing power across sectors. Core inflation, which strips out volatile food and energy prices, also showed signs of easing. It slowed to 2.4% in May, from 2.7% in April, falling below expectations of 2.5%. On a monthly basis, core prices rose by just 0.1%. Among the main inflation components, food, alcohol and tobacco remained the strongest driver, rising 3.3% year-on-year, up from 3.0% in April. Services inflation, which had been particularly resilient, dropped sharply from 4.0% to 3.2%, contributing significantly to the broader deceleration. Non-energy industrial goods recorded a stable 0.6% annual increase, while energy prices continued their downward trajectory, declining by 3.6% compared to a year ago. On a monthly basis, overall inflation was flat, after a 0.6% rise in April, signalling a clear slowdown in momentum. The highest annual rates were recorded in Estonia (4.6%), Slovakia and Croatia (both 4.3%). France registered the lowest inflation, at just 0.6%, suggesting a stark divergence in price pressures among euro area members. Monthly inflation was highest in Portugal and Croatia, where prices rose 0.7% and 0.6%, respectively. By contrast, deflationary readings were observed in Belgium, Spain, France, Lithuania, the Netherlands, Austria and Slovenia. In a separate release, Eurostat reported that the euro area unemployment rate fell to 6.2% in May, down from 6.3% in March and 6.4% a year earlier. Market bets on ECB easing The euro lost ground against the dollar following the inflation print, dropping to $1.1400 as investors moved to fully price in a 25-basis-point cut to the ECB's deposit facility rate on Thursday. The cut would bring the deposit facility rate to 2.0%, its lowest level since January 2023. Eurozone sovereign bonds remained broadly. The yield on Germany's two-year bond, which is sensitive to ECB policy moves, traded at 1.77%. European equities edged lower on Tuesday morning, with the Euro STOXX 50 down 0.8%, after the OECD cut its global growth outlook, pointing to a slowdown fuelled by rising trade tensions. Orange, Société Générale and LVMH led losses, falling 3%, 1.9% and 1.6%, respectively. Deutsche Telekom gained 2%, emerging as the top performer among eurozone blue-chip stocks.
Euronews
2 days ago
- Business
- Euronews
Eurozone inflation falls below ECB 2% target in May: Rate cut in sight
Inflation in the euro area cooled more than expected in May, bolstering expectations that the European Central Bank (ECB) will announce another interest rate cut at its meeting on Thursday. Annual consumer price growth slowed to 1.9% in May, down from 2.2% in April, according to a flash estimate from Eurostat. The figure came in below economists' forecast of 2%, and marks the first time inflation has dipped below the ECB's 2% target since September 2024. The decline in headline inflation suggests that business uncertainty, partly driven by renewed global trade tensions and soft consumer demand, is weighing on pricing power across sectors. Core inflation, which strips out volatile food and energy prices, also showed signs of easing. It slowed to 2.4% in May, from 2.7% in April, falling below expectations of 2.5%. On a monthly basis, core prices rose by just 0.1%. Among the main inflation components, food, alcohol and tobacco remained the strongest driver, rising 3.3% year-on-year, up from 3.0% in April. Services inflation, which had been particularly resilient, dropped sharply from 4.0% to 3.2%, contributing significantly to the broader deceleration. Non-energy industrial goods recorded a stable 0.6% annual increase, while energy prices continued their downward trajectory, declining by 3.6% compared to a year ago. On a monthly basis, overall inflation was flat, after a 0.6% rise in April, signalling a clear slowdown in momentum. The highest annual rates were recorded in Estonia (4.6%), Slovakia and Croatia (both 4.3%). France registered the lowest inflation, at just 0.6%, suggesting a stark divergence in price pressures among euro area members. Monthly inflation was highest in Portugal and Croatia, where prices rose 0.7% and 0.6%, respectively. By contrast, deflationary readings were observed in Belgium, Spain, France, Lithuania, the Netherlands, Austria and Slovenia. In a separate release, Eurostat reported that the euro area unemployment rate fell to 6.2% in May, down from 6.3% in March and 6.4% a year earlier. Market bets on ECB easing The euro lost ground against the dollar following the inflation print, dropping to $1.1400 as investors moved to fully price in a 25-basis-point cut to the ECB's deposit facility rate on Thursday. The cut would bring the deposit facility rate to 2.0%, its lowest level since January 2023. Eurozone sovereign bonds remained broadly. The yield on Germany's two-year bond, which is sensitive to ECB policy moves, traded at 1.77%. European equities edged lower on Tuesday morning, with the Euro STOXX 50 down 0.8%, after the OECD cut its global growth outlook, pointing to a slowdown fuelled by rising trade tensions. Orange, Société Générale and LVMH led losses, falling 3%, 1.9% and 1.6%, respectively. Deutsche Telekom gained 2%, emerging as the top performer among eurozone blue-chip stocks. Among the 27 European countries covered in the OECD's Taxing Wages 2025 report, seven recorded a decline in real post-tax income in 2024 compared to 2023 for the average single worker without children. This measure reflects the amount of money left to spend or save after taxes are deducted and inflation is taken into account. The countries affected were Italy, Estonia, Czechia, France, Greece, Belgium, and Spain. In Italy, the average wage increased by 3.9% in 2024. With inflation at 1.2%, this translated to a real wage growth of 2.7% before taxes. However, the personal average tax rate—which includes both personal income tax and employee social security contributions—rose sharply by 7.5%. This created a significant gap between real wage growth and the increase in personal taxation, ultimately eroding much of the benefit from higher wages. Cristina Enache, global tax economist at the Tax Foundation, emphasised the impact of increased social security contributions. While this highlights a growing gap between wages and taxation, it doesn't directly reveal how much real post-tax income changed. Personal average tax rates also increased by more than 4.5% in Estonia and Czechia, leading to lower real post-tax incomes in 2024, as real wage growth did not keep pace. Enache of the Tax Foundation noted that in Estonia, the tax burden rise was driven by the removal of certain tax allowances. In Czechia, the increase was primarily due to higher social security contributions from either employees or employers. In France, real wages grew by 0.7%, but the personal average tax rate increased by 1.7%, resulting in lower real post-tax incomes compared to 2023. During this period, Portugal, the UK, and Turkey recorded the highest increases in real post-tax incomes. In Portugal, the personal average tax rate fell by 8%, while real wages grew by 4.7%. 'Portugal reduced its income tax rates for the first six tax brackets, reducing the overall tax wedge for the average income earner,' Cristina Enache told Euronews. In the UK, the average tax rate dropped by 8.7%, although real wage growth was modest at 1.6%. In Turkey, despite a 3.9% increase in the personal average tax rate, a substantial 15.5% rise in real wages led to significantly higher real post-tax incomes in 2024 compared to 2023. However, some critics have accused the national statistical office of manipulating inflation figures. Cristina Enache explained that "real post-tax income" refers to the income a person takes home after taxes, adjusted for inflation. 'A lower real post-tax income means that after taxes and inflation, the individual has less money to spend. Therefore, a decrease in the real post-tax income between 2023 and 2024 means that the worker earning the average wage is losing purchasing power,' she said. 'Bracket creep' occurs when income growth causes individuals to pay higher average income tax rates over time. This typically happens when inflation pushes taxpayers into higher tax brackets or erodes the value of tax credits, deductions, and exemptions. According to the Tax Foundation, 'bracket creep' leads to higher income taxes without any real increase in income. 'Indexing the income tax (and, depending on the design, the social security contributions) to inflation would avoid bracket creep and could mitigate the decrease in real post-tax income for workers,' Enache pointed out. The Euronews article titled 'Where did real wages rise and fall the most in Europe in 2024?' takes a closer look at how wages changed compared to 2023—examining nominal increases, inflation, real wage growth, and average salaries.
Reuters
29-05-2025
- Business
- Reuters
European stocks to scale new heights in 2026, trade tensions temper loftier hopes
LONDON, May 29 (Reuters) - European shares are expected to rise slightly by the end of 2025 before scaling new heights in 2026, boosted by monetary easing and higher fiscal spending, but tariff and trade uncertainties are tempering hopes for bigger gains, a Reuters poll found. The pan-European STOXX 600 (.STOXX), opens new tab index is expected to rise to 557 points by end-2025, according to the median forecast in the poll of equity analysts and portfolio managers. That would imply a gain of around 0.9% from current levels and below a record high of 565.18 touched on March 3. The poll was taken before a U.S. on Wednesday blocked President Donald Trump's April 2 across-the-board duties on imports from U.S. trade partners from going into effect. The STOXX 600 has rallied nearly 9% this year, outperforming a 0.7% rise in the S&P 500 (.SPX), opens new tab, as euro area stimulus boosts long-term growth prospects and investors drop U.S. assets amid uncertainty over Washington's next moves. The index is seen hitting a record 570 by mid-2026 and ending the year at the same level, the poll showed. Expectations were down from earlier this year when the STOXX 600 was seen rising to 610 by mid-2026. The blue-chip Euro STOXX 50 (.STOXX50E), opens new tab benchmark index is also expected to post a further 0.6% gain in 2025 before reaching new heights in 2026 to end the year at 5,700; 5.3% up from Tuesday's close of 5,415.45. While European stocks are benefiting from the "Sell America" theme, trade tensions and an uncertain outlook for corporates are keeping hopes of further gains in check. The STOXX 600 slumped as much as around 2.7% on Friday after Trump threatened 50% tariffs on the EU, only to delay their implementation on Sunday, news that sent European stocks higher on Monday. Markets have been whipsawed since Trump's April 2 'Liberation Day' tariff announcement. "Given what we saw in early April, investors should be very aware of how quickly sentiment can shift," said Michael Field, chief equity market strategist, EMEA, Morningstar. "We are still waiting for resolutions between the EU and the U.S. in terms of trade, and this could most certainly be a catalyst for a market shock." As well as the potential impact on stock markets, poll respondents expressed wariness about the impact on companies. "The outcome of trade negotiations, especially between the U.S. and Europe, will have a major impact on most European businesses. Adaptation to the new rules will take time and incur costs," said Tomas Hildebrandt, senior portfolio manager, Evli. Despite trade jitters, Germany's planned increase in spending on defence and infrastructure and the spillover to the wider euro zone is seen as a major plus for stocks Kevin Thozet, a member of the investment committee at Carmignac, said the fiscal impetus will last for decades, and feed into company earnings. "After two years of stagnating economic growth, Europe appears to be finally emerging as an economic powerhouse, with Germany having taken many by surprise with the size and the speed at which its fiscal U-turn unfolded," he said, flagging the industrials sector as a beneficiary of the spending boost. However, Marco Vailati, head of research and investments at Cassa Lombarda, said a lot of positive news had already been priced in, and the euro's recovery would also weigh. Market participants polled expect Germany's DAX (.GDAXI), opens new tab to fall 5.1% by year-end. The index hit a record high above 24,300 on Wednesday and has risen over 20% so far in 2025. Expectations of more European Central Bank rate cuts have also underpinned sentiment. Carmignac's Thozet said lower rates should support credit demand and push down the savings rate. The ECB is widely expected to lower interest rates next week for the eighth time in this economic cycle by 25 basis points to 2%. (Other stories from the Reuters Q2 global stock markets poll package)
Euronews
03-05-2025
- Business
- Euronews
Eurozone inflation tops expectations: ECB rate cuts in jeopardy?
ADVERTISEMENT Price pressures in the eurozone exceeded expectations in April, raising fresh challenges over the disinflation trend and potentially complicating the European Central Bank's (ECB) roadmap to lower interest rates further in the coming months. According to preliminary figures released by Eurostat on Friday, consumer prices rose 2.2% year-on-year, unchanged from March but slightly above the 2.1% forecast by economists. On a monthly basis, inflation accelerated by 0.6% as in March, suggesting that disinflationary momentum may be stalling. More worryingly for policymakers in Frankfurt, core inflation—which excludes volatile food and energy prices—rose to 2.7% in April, up from 2.4% the previous month and well above the 2.5% consensus estimate. It was the first uptick in core inflation since May 2024, with services once again leading the charge. Services inflation remains ECB's key headache Services inflation, a central metric in the ECB's assessment of underlying price pressures, surged to 3.9% annually, up from 3.5% in March. On a month-on-month basis, services prices increased by 0.9%. The rise in food, alcohol and tobacco inflation—from 2.9% to 3.0%—added to the upside pressures, while energy prices continued to drag on the headline figure, falling 3.5% compared to the same period last year. Across the euro area, inflation remained highly uneven. Estonia recorded the highest annual inflation rate at 4.4%, followed by the Netherlands and Latvia at 4.1%. France saw the lowest price growth, with annual inflation at just 0.8%. Markets unmoved despite inflation flare-up Despite the stronger-than-expected inflation print, financial markets remained largely undisturbed. Investors appeared to maintain confidence that the ECB would press ahead with a rate cut in June, with markets largely interpreting April's data as a temporary bump rather than a shift in trend. German two-year Schatz yields, often seen as a barometer of ECB policy expectations, held steady at 1.73%, while ten-year Bund yields remained unchanged at 2.46%. The euro also shrugged off the data, holding onto prior gains against the dollar at 1.1330. Equities extend gains as investors focus on earnings Equity markets, meanwhile, extended their rally, buoyed by corporate earnings and investor optimism. The EuroSTOXX 50 index rose 0.8% on Friday, while Germany's DAX climbed 1.8%, on course for its eighth consecutive day of gains. Defence powerhouse Rheinmetall AG led the DAX higher, jumping 3.6% to hit new record levels amid continued demand for military equipment. Within the broader EuroSTOXX 50, ING Groep, Airbus and Bayer were top performers, rising 5.2%, 5.1% and 4.2%, respectively. ADVERTISEMENT On the downside, Munich RE and energy group RWE lost 4.9% and 3.6%. Eurozone banks also gained ground, with the EuroSTOXX Bank index up 1.9%, reflecting resilient investor sentiment amid a potentially prolonged period of restrictive policy.
