European markets fall as core inflation in the eurozone remains stable

European stock indexes declined on Tuesday after the latest eurozone inflation data showed a mixed picture of price pressures in the region.

 

After a successful session on Monday, the regional Stoxx 600 index started to fall again after the previous week's gains. The index was down 0.61% as of 2:48 p.m. in London, extending the decline following the release of consumer price index data.

 

Most sectors were in the red zone, with insurance stocks falling 2.09%, while the oil and gas sector was up 0.82%.

 

Core inflation in the eurozone fell to 2.5% in June, as reported by the European Statistics Office, which matched economists' forecasts.

 

However, core and services inflation remained at the same level at 2.9% and 4.1% respectively.

 

According to LSEG, market pricing suggests that the ECB will cut rates by 25 basis points twice more before the end of the year. ECB Vice President Luis de Guindos told CNBC on Tuesday that while the central bank is confident inflation will move closer to its 2% target, "the next few months will not be easy" and the bank has no predetermined path for monetary policy decisions.

 

In addition, the British Retail Consortium reported that annual UK store price inflation fell to 0.2% in June from 0.6% in May, the lowest since October 2021. The Bank of England will have to decide when to start easing monetary policy after core UK inflation hit its 2% target.

 

German institute Ifo said the business climate in the auto industry "deteriorated slightly" in June as it fails to gain momentum with the broader economy.

 

Meanwhile, UK group Sainsbury's reported a 3% rise in sales in its first quarter trading statement.

 

Asia-Pacific markets mostly fell overnight, partly following Wall Street, where the Nasdaq Composite index hit a new record thanks to technology stocks.

 

U.S. stock indexes were slightly lower after the major averages ended the first half of 2024 with gains supported by technology stocks.