Published - May 17th, 2023 @ 10:50 AM (GMT+2)
Stoxx 600 down 0.2% amid US debt-ceiling negotiations.
Market participants simultaneously evaluate the potential for inflation and a prospective economic downturn. European equities experienced a downturn on Wednesday, with the US debt-ceiling deadlock continuing to cause unease. The Stoxx 600 declined by 0.2% at 8:11 a.m. London time, ahead of the final eurozone inflation figures for April. The preliminary data indicated an incremental rise in the headline rate to 7.0%, while the core rate decreased marginally to 5.6% from 5.7% due to subdued inflation for non-energy industrial products.
London Stock Exchange underperforms, Siemens AG upticks.
London Stock Exchange Group Plc's stock was one of the most significant underperformers, following a share sell-off by an investment group that included Blackstone Inc. and Thomson Reuters Corp. Conversely, Siemens AG saw a 1.7% uptick after revising its fiscal 2023 outlook upwards for the second time, driven by surges in revenue and orders.
Despite a near 10% surge in the equity benchmark of Europe until April's end, May has seen a lackluster performance amid fears of prolonged high-interest rates and an impending recession. The ongoing US debt-ceiling discussions have dampened risk appetite, with the possibility of an unparalleled US default. Negotiations are likely to heighten as both parties strive for a preliminary agreement for President Joe Biden and House Speaker Kevin McCarthy to assess.
Barclays advises to lock gains from European stocks' outperformance.
Joachim Klement of Liberum Capital explained that the uncertainty surrounding the US debt-ceiling negotiations keeps many investors on the sidelines. On another note, strategists at Barclays Plc suggested that capitalizing on the recent outperformance of European stocks over their US counterparts could be a smart move, despite their continued preference for regional equities due to their larger diversification, attractive valuations, and investor positioning.
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