European Markets Poised for First Weekly Decline in Five Weeks
European stock markets traded relatively flat on Friday (August 14) and are on track to record their first weekly decline in over a month. The Stoxx Europe 600 index remained virtually unchanged as investors adopted a cautious stance amidst a combination of inflation data and rising geopolitical risks in the Persian Gulf.
On a weekly basis, the Stoxx Europe 600 is expected to fall by approximately 0.2%, snapping a four-week winning streak. That previous run of gains marked the longest period of appreciation since April and had pushed several European indices to all-time highs.
Movements across major European indices were mixed. Germany's DAX rose about 0.6%, while France's CAC 40 and the UK's FTSE 100 remained relatively flat.
Investors have begun taking profits following a strong summer rally. Recent inflation data actually signaled that price pressures are easing, thereby alleviating concerns regarding tighter interest rate policies.
However, a surge in oil prices driven by escalating tensions in the Persian Gulf has once again increased the geopolitical risk premium. High energy costs threaten to reignite inflationary pressures and raise operating expenses for European companies.
Newsmaker Analysis: European markets are holding near highs, but the rally is losing momentum. A combination of profit-taking and rising oil prices acts as a primary headwind. As long as geopolitical risks remain elevated, European indices may experience increased volatility, even though cooling inflation continues to provide support from a monetary policy perspective. (asd)
Source: Newsmaker.id
