European stock markets are trending negatively as predictions that central banks in the region will continue to increase interest rates gain strength.
Although there were increases in the New York stock market yesterday and in the Asian stock markets today, due to the decrease in uncertainties regarding the policies of the US Federal Reserve (Fed), the decrease in oil prices and the decline in bond interest rates, European markets are predominantly selling.
Ongoing inflationary concerns in the region are causing predictions that central banks will continue to increase interest rates to gain ground. This situation caused a decrease in risk appetite in European markets.
The Bank of England (BoE) kept the policy rate constant at 3.75 percent yesterday, in line with market expectations. In the statement of the BoE Monetary Policy Board, it was stated that 6 of the board members, including BoE Governor Andrew Bailey, voted to keep the policy rate at 3.75 percent, and 3 of them voted to increase it by 25 basis points to 4 percent.
The bank predicted that inflation could rise slightly above 4 percent in the first quarter of 2027. BoE, which announced that it will reduce its bond portfolio by 2034, announced that it will reduce the bond portfolio by an average of 46 billion pounds annually.
BoE Governor Bailey said, “If the conflict in the Middle East continues for a long time and the risk of second-round effects increases, monetary policy may need to be tightened.” he said.
The European Central Bank (ECB) also increased policy rates by 25 basis points last week.
On the macroeconomic data front, the Consumer Price Index (CPI) for August in the Eurozone rose by 0.4 percent monthly, within expectations, while it rose slightly below expectations with 3.2 percent annually.
According to the data announced today, the Producer Price Index (PPI) in Germany increased by 1.1 percent monthly and 4.6 percent annually in August, exceeding expectations.
With these developments, as of 10.35 in the European markets, the Stoxx Europe 600 indicator index is at 641.4 points, with a decrease of 0.2 percent, and the FTSE 100 index in the UK is at 10,781 points, with a decrease of 0.3 percent.
In Germany, the DAX 40 index is at 25,605 points, 0.5 percent below the previous close, in Italy, the FTSE MIB 30 index is at 52,200 points, with a 0.4 percent decrease, in France, the CAC 40 index is at 8,148 points, with a 0.5 percent loss, and in Spain, the IBEX 35 index is at 19,757 points, with a 0.4 percent decrease.
Analysts stated that industrial production in the USA and the current account balance in the Eurozone will be monitored today.
