European markets fall as investors weigh inflation outlook and Fed comments

European markets retreated on Tuesday as caution returned to global sentiment ahead of U.S. Federal Reserve Chairman Jerome Powell’s speech later in the day. This follows hawkish comments from two Fed officials on Monday.
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The Stoxx 600 index was down 0.8% in mid-afternoon trading, with retail stocks leading the losses. All sectors and major bourses were in the red.
Investors are also keeping an eye on inflation data this week, with U.S. consumer price data for December due Thursday.
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In Asia-Pacific markets overnight, stocks traded mixed after the Nasdaq Composite extended its gains for a second day on Wall Street. Technology stocks helped the index skirt losses on Monday, as traders added to their bets that inflation may be easing. U.S. stock futures inched lower in early premarket trade on Tuesday.
David Neuhauser, chief investment officer of hedge fund Livermore Partners, said Tesla’s stock had been “nothing short of a disaster” for investors after shares in the company declined by more than 65% in the past year. Neuhauser has bet against Tesla by shorting its shares.
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European interest rates will still need to rise significantly in order to bring inflation down to 2%, according to European Central Bank Economist Isabel Schnabel. Speaking at an event organized by the Swedish Riksbank, Schnabel said that this needs to happen in a timely fashion.
She warned that if the bank does not take action now, it will only have to take more aggressive measures later, which will hurt the economy and hamper the transition to green energy.
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Schnabel said that the ECB needs to do more to make its bond holdings more environmentally friendly.
Renaud Foucart, a senior lecturer in Economics at Lancaster University, has outlined what to expect from French President Emmanuel Macron's upcoming pension reform. According to Foucart, the reform is likely to include an increase in the retirement age and a reduction in pension benefits.
Euronav's shares fell sharply in early trading after Frontline, its Norwegian rival, abandoned plans for a $4.2 billion merger with the Belgian firm.
After releasing its half-year earnings report, British wargame manufacturer Games Workshop saw its stock fall by 5.6%.
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The price of platinum is rising rapidly, due to its increasing use in a variety of applications, from jewelry to fuel cells.
According to a survey released by the New York Federal Reserve on Monday, consumers expect to see the burden of inflation easing, and to pull back significantly on their spending.
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The central bank district's monthly Survey of Consumer Expectations for December showed that the one-year inflation outlook declined to 5%, down 0.2 percentage points from the previous month. This is the lowest level since July 2021.
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The sudden and rapid dismantling of Beijing's stringent Covid-19 controls has raised hopes that its battered economy could follow a similarly rapid pace of recovery. This is a positive development for the city and its people after years of struggling with the pandemic.
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As the world begins to reopen after the pandemic, Wall Street analysts are identifying the top stocks to benefit from the recovery. Hotels and airlines are among the obvious beneficiaries, but there are also many “less obvious” companies that stand to gain from the global economic rebound.
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European markets are set to open lower as investors await more inflation data later this week. U.S. consumer price data for December is due Thursday.
According to data from IG, the U.K.'s FTSE 100 index is expected to open 49 points lower at 7,676, Germany's DAX 95 points lower at 14,698, France's CAC down 52 points at 6,855 and Italy's FTSE MIB down 204 points at 25,181.
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On Tuesday, data releases include Dutch inflation figures for December and U.K. British Retail Consortium retail sales figures for December. Airbus will also announce its annual commercial aircraft orders and deliveries.