FX.co ★ European markets reverse downwards

European markets reversed downwards and dropped sharply on Tuesday, following the release of macroeconomic data in the eurozone.

At the time of writing, the STOXX Europe 600 slid down by 0.07% to 446.25 points.

On the STOXX Europe 600, the best-performing stock is Lanxess (+10.7%). The worst-performing stocks are B&M European Value Retail SA (-10.6%) and BillerudKorsnaes AB (-8.7%).

The CAC 40 slumped by 0.9% to 6503.25 points, while the DAX lost 0.79% and reached 14.460 points. The FTSE 100 edged up by 0.24% to 7618.57 points.

Biggest gainers and losers

Shares of GSK increased by 0.3% after the UK pharmaceutical company announced it would acquire Affinivax Inc. for $3.3 billion.

Yamana Gold jumped by 37% after the Canadian mining company was acquired by South Africa's mining company Gold Fields for $6.7 billion. The deal is expected to close in the second half of 2022.

Shares of Royal DSM rose by 7.5%. The Dutch chemical company announced its plans to merge with Swiss fragrance and flavor producer Firmenich. The merger is expected to be completed in the first half of 2023.

Unilever surged up by 7% after the consumer goods company announced that the American investor Nelson Peltz is to become a board member.

Shares of SAS slumped by almost 7% on reports that the Scandinavian airline plans to raise $967 million in new cash. The company also warned investors of liquidity problems if it falls short.

Factors influencing markets

According to Eurostat estimates, inflation in the eurozone reached an all-time high of 8.1% YoY in May, compared to 7.4% in April. Soaring energy prices have fuelled rising inflation.

French GDP unexpectedly declined by 0.2% in Q1 2022 compared to the previous quarter, Insee reported. France's economy shrank for the first time since October-December 2020.

Harmonized consumer prices increased in by 0.7% to 5.8% YoY, reaching an all-time high.

Consumer spending in France fell by 0.4% in April. Economists expected consumer spending to increase by 0.5%.

According to Germany's Federal Employment Agency, unemployment remained at 5% in May, while jobless claims declined by 4,000, below an expected 5,500 decrease.

Annual inflation in Germany is forecast to reach 7.9% in May, up from 7.4% in April. Analysts expected price to rise by 7.6%.

European traders are focused on first results of US stock market trading after the long weekend. On Monday, US stock exchanges were closed for Memorial Day.

Monday's trading session

On Monday, European indexes closed in positive territory, with STOXX Europe 600 increasing by 0.59% to 446.57 points.

The CAC 40, the DAX, and the FTSE 100 gained 0.7%, 0.8%, and 0.2% respectively.Shares of Countryside Partnerships jumped by 18.6% on Monday after Inclusive Capital Partners announced it would make a second takeover bid for the UK company.

The market capitalization of L'Oreal, Kering, and Hermes increased by 2.1%, 3,3%, and 3.9% respectively.

Shares of Delivery Hero rose by 9.7%.

European investors found support in the announcement by Chinese authorities that the lockdown in Shanghai would be lifted soon. Local authorities published an economic recovery plan, stating that the city's industry would resume full operation in June. Authorities in Beijing stated that the COVID-19 outbreak in the Chinese capital was fully under control.

Revised outlooks on Fed monetary policy and reduced investor anxiety about an excessively aggressive tightening cycle also increased optimism in Western European markets.