Europe stock market is struggling as a result of the increasing inflation rate in the region. On Thursday, European shares plummeted after the bond buy-back relief plan availed by the Bank of England to revamp the struggling markets didn’t work as expected. Also, the Germany inflation data record a indicates a notable inflation hike. Notably, stoxx 600 within the continent has reportedly declined by about 1.7 percent, thereby instilling fears about rising prices and its implications on the eventual cost of living.
Meanwhile, other Stoxx spheres were not spared in the prevailing downturn. H&M, a renowned fashion chain, declined by about 6 percent after witnessing less gains. Next, on the other hand endured over 12 percent loss after it cut its sales and profit projections.
Investors have a lot to worry as the rising cost of living. The prevailing economic distress poses a huge impact on their businesses as Europe stock market dips further.
How inflation in Eurozone has triggered Europe stock market to struggle
Meanwhile, emerging reports are indicating how world economies are battling inflation. According to data provided by Eurostat, inflation has hit double figures in the Eurozone due to the increment in energy prices amidst the prevailing conflict between Russia and Ukraine. Energy prices have skyrocketed by 40.8%, thus inflicting a 10% inflation price in the region. In September, Eurozone consumer prices have soared notably by 10%.
Governments are sweating due to the diverse inflation rate that has manifested in the Eurozone. In September, France inflation price is at 6.2% while the Netherlands, recorded a whopping 17% inflation. For Netherlands, it’s the the highest the country has ever recorded since the Second World War. Germany inflation data also indicates a 10.8% inflation price. Due to the crisis, some countries in the Eurozone are spending more to subsidize energy prices for consumers. Thus, dividing the European economy while making the situation more complicated for policymakers.
The increasing inflation will compel the European Central Bank to stick with its plan on rate surges. Though the plan could trigger an economic session in Europe, yet it must be done for price control. Currently, ECB is setting up mechanisms that will help lessen demand and slow the growth of inflation. These mechanisms come as a needed effort to prevent inflation from eating deeply into the economy.
Expert’s opinion on the market condition
Reacting to the disturbing development, Patrick Armstrong, chief investment officer at Plurimi Wealth in London said “the market is giving up some of the gains that happened yesterday that were just unwarranted.”
Armstrong further that “I don’t think there’s going to be a big change on the macro picture. But as valuations get cheaper and cheaper, that will attract value and bargain hunters.”
