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European Stocks Close in Red as UK Inflation Accelerates to Nearly Three-Year High

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Last updated: 07/14/2021 12:29:35

12:29 PM EDT, 07/14/2021 (MT Newswires) -- European stocks were marginally down on Wednesday following higher-than-expected inflation reported by the UK, which was partially driven by temporary effects, such as increasing prices for fuel, and the majority of the growth led by the recovery from the COVID-19 impact.

The FTSE index in the UK was down nearly 0.5%, and the Swiss Market Index was down 0.2%. The Stoxx Europe 600, the German Dax and the French CAC all closed a fraction of a point lower.

Britain's annual inflation for June exceeded the Bank of England's 2% target for the second consecutive month and jumped to its highest level since August 2018, as rising values of food, second-hand cars and apparel keep driving the rate, according to official data. The UK's consumer price index climbed 2.5% in the 12 months to June, higher than the estimated 2.2% rise and the 2.1% growth recorded in May, according to the Office for National Statistics. On a monthly basis, inflation was 0.5% in June, lower than the 0.6% recorded in May, but ahead of the 0.2% consensus.

As countries around the world are taking steps to battle climate change, the UK government unveiled a plan to decarbonize all modes of transport in the country by 2050, which includes the end of all new diesel and petrol heavy goods vehicles by 2040. The proposal also includes a commitment to achieve net zero domestic aviation emissions by 2040, transition to green shipping, and creation of a net zero rail network by 2050, and the electrification of the entire fleet of government cars and vans by 2027.

Meanwhile, the European Commission also rolled out proposals to meet its target of slashing greenhouse gas emissions by at least 55% by 2030, and eliminating them completely to reach net-zero emissions by 2050. Plans include effectively banning the sale of petrol and diesel cars by 2035, to cut overall energy use, reduce emissions and address energy poverty.

The Governing Council of the European Central Bank kicked off a multi-year digital euro project with an investigation phase, under which the ECB will consider design options, user requirements and at how financial intermediaries could provide services building on a digital euro, amid growing demand for electronic means of payment.

On the corporate front, EQT's (EQT.ST) EQT Infrastructure subsidiary entered into an agreement to acquire US-based Covanta for about $5.3 billion. Under the agreement, which was unanimously approved by the waste-to-energy facilities operator's board, shareholders will receive $20.25 per share in cash. EQT will also take on Covanta's net debt obligations.

Moving to the UK, in what is said to be the first major listing by a local private equity company in London, British private-equity firm Bridgepoint Group is expected to be valued at 2.9 billion pounds sterling ($4.02 billion) in its initial public offering on the London bourse, Bloomberg News reported. The company and selling shareholders are tipped to raise 789 million pounds in the offering, which could go up to 907 million pounds if the overallotment option is exercised.

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