FX.co ★ European stocks lower after a sharp rise the day before

On Wednesday, Western Europe's leading stock market indicators closed lower after rising a day earlier. Traders continue to wait for the decisions of the European Central Bank, the Bank of England and the U.S. Federal Reserve on the key interest rate.

The pan-European Stoxx 600 fell by 0.48% to 440.47 points.

The French CAC 40 fell by 0.21%, the German DAX lost 0.26% and the British FTSE 100 declined by 0.09%.

Leaders of growth and decline

Spanish clothing retailer Industria de Diseno Textil SA rose 1.5%. According to the results of three quarters of fiscal 2022, which ended in October, the company increased EBIT profit by 27%.

German tour operator TUI dropped 7.7%. The company's loss narrowed in the past fiscal year amid strong results of the summer season, but it was still above the average forecast of analysts.

The share price of Swiss construction materials maker Holcim Ltd. rose 0.6%. On Wednesday morning, the company announced it has signed an agreement to sell its business in Russia to the local management team.

Market sentiment

On Wednesday, European investors were analyzing fresh statistics on the countries of the region. According to the UK Office of National Statistics (ONS), the inflation rate rose 10.7% in

November from a year earlier, bringing the rate of inflation down slightly from 11.1% in October. In this case, experts on average expected consumer prices at 10.9%. in November

According to analysts, the slowdown in consumer price growth in England was due to cooling fuel prices (down to 17.2% from October's 22.2%). Inflation for restaurants and hotels was 10.2% in November, up from 9.6% in October. Still, the price of food and non-alcoholic drinks went up by 16.5%, the fastest pace since 1977.

In Spain, headline inflation slowed for a fourth month in a row, falling to 6.7% in November from 7.3% in October. Experts on average forecasted a fall in consumer price growth to 6.6%.

Investors are anxiously awaiting the forthcoming December meetings of the ECB, the Fed and the BoE on monetary policy. In addition, the Swiss and Norwegian central banks will hold meetings this week.

Last week, the Reserve Bank of Australia raised its official cash rate to 3.1%, a 10-year high. In addition, representatives of the central bank reiterated forecasts of the need for further rate hikes in order to curb record levels of inflation.

The results of the ECB and the BoE meetings will be announced on Thursday. Markets forecast that both central banks will raise the interest rate on the backdrop of the permanent growth in inflation. Earlier in his interview to the Italian newspaper Milano Finanza, ECB Chief Economist Philip Lane said consumer-price growth is probably near its zenith.

The ECB raised all three key ECB interest rates by 75 basis points. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 2.00%, 2.25% and 1.50% respectively. Most analysts expect the ECB to increase the lending rate to at least 2% from 1.5% at its December meeting.

In addition, the Fed will announce its monetary policy decision on December 14.

Recall that last Wednesday Fed Chairman Jerome Powell spoke at the Brooking Institute Hutchins Center on fiscal and monetary policy.

In his statement, the head of the central bank signaled a potential easing of monetary policy and a slowdown in future interest rate hikes on the back of more favorable data on inflation in America.

The minutes of the Fed's November meeting were released last Friday. According to the document, the majority of the Fed leaders considered it reasonable and appropriate to slow down the central bank's interest rate hike in the near future.

According to the world's leading derivatives marketplace CME Group, to date, 71.1% of analysts expect to raise the interest rate at the December meeting by 50 points - to 4.25-4.5% per annum.

Recall that the central bank raised interest rates by 75 basis points in October for the fourth consecutive meeting. The rate is currently at its highest level since January 2008, at 3.75-4.00% per annum.

Next Friday, Eurostat will publish its final estimate of annual inflation in the euro area at the end of last month. According to experts' preliminary forecasts, consumer price growth fell to 10% in November from October's 10.6%.

Trading results the day before

On Tuesday, the leading stock exchange indicators of Western Europe closed the trading session in the green zone.

The Stoxx Europe 600 rose 1.3% to 442.6 points.

French CAC 40 gained 1.42%, German DAX gained 1.34% and British FTSE 100 gained 0.76%.

Shares of British American Tobacco, a manufacturer of cigarettes, tobacco and nicotine products fell by 0.9% after the U.S. Supreme Court on Monday cleared the way for California to enforce a voter-approved ban on flavored tobacco products.

British hotel chain operator IHG rose by 0.2% as the company announced on Tuesday that Michael Glover will take over as CFO, effective March 2023.

German tourist operator TUI AG rose by 2.3%. Despite the energy crisis and record level of inflation, the company expects an increase in demand for tourist trips next summer.

The share price of Italian Banco BPM soared by 4%. Fondazione Enasarco has bought 1.97% of Banco BPM, the specialist Italian pension fund said on Tuesday.

Spanish pharmaceutical company PharmaMar shares fell by 0.9% after the Ibex-35 Technical Advisory Committee announced its exclusion from the Spanish stock market index as of December 19.

Swiss software developer for financial companies Temenos jumped by 4.3%.

The share price of Rolls-Royce Holdings PLC, a British manufacturer of equipment for aviation and ships, fell by 3.3%.

British pharmaceutical company GSK Plc increased by 0.2%. The company signed a four-year cooperation contract with the U.S. Wave Life Sciences.

The share price of British online retailer THG Plc soared by 9.7%.

Norway-based commercial real estate company Entra ASA jumped by 8.6%.

The share price of German delivery service operator Delivery Hero SE increased by 8.3%.

On Tuesday, European investors were analyzing fresh statistics on the countries of the region. Thus, according to the final assessment of analysts, the inflation rate in Germany declined in annual terms to 10% in the past month from 10.4% a month earlier.

The ZEW Indicator of Economic Sentiment for Germany increased to -23.3 in December of 2022 from -36.7 in November. The value of the index increased to the February high amid expectations of a decrease in the record rate of inflation.

Meanwhile, UK wages and salaries rose 6.1% in October.

Industrial production in Italy in October fell by 1% on a monthly basis and 1.6% on an annual basis. At the same time experts predicted a decline of the first indicator by 0.4%, and the second by 0.1%.

As for news from the United States, the report of the US Department of Labor on the Consumer Price Index (CPI) was released Tuesday evening. According to the report, consumer prices rose at a 7.1% annual rate in November after rising 7.7% in October. Thus, consumer prices slowed to their lowest level since December 2021. At the same time experts predicted an increase in the index by 7.3%.