European stocks decline due to inflation as oil and gas prices rise

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There has been a decline in European stocks today (Wed 6th Oct), due to concern about high inflation, fuelled by rising energy costs, which is forcing central banks to tighten their monetary policy faster, consequently affecting the post-pandemic recovery.

Normally we would expect to see an increase in German factory orders, a clear indicator of trends for Europe’s largest economy, but a shock 7.7% decline proved otherwise in August, setting the negative tone. According to Investing.com “The slump was caused largely by the key automotive sector, which has repeatedly flagged problems with its supply chain this year.” 

After New Zealand’s central bank raised interest rates for the first time in 7 years to combat inflation pressures, Europe is following suit, with Romania the latest European country to do so yesterday (Tues 5th Oct). Poland is also predicted to increase their interest rates tomorrow (Thurs 7th Oct).

Investing.com state that energy markets are creating headaches for the industry, with “U.K gas prices hitting a new all-time high of 330 pence a therm.”

Oil also traded at multi-year high levels amid the global apprehension about energy supply, especially after the OPEC+ bloc was not in favour of speeding up a pre-agreed pace of output increases. 

Source: Investing.com

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