European markets dip lower

Europe lower amid another inflation record

European stock markets are a little lower on Tuesday, handing back Monday’s gains to trade relatively flat on the week.

It’s not particularly surprising that we’ve seen a reversal of Monday’s moves considering the inflation data we’ve had from the bloc. The data from Germany and Spain meant the risks were heavily tilted to the upside and that’s how it materialised. ​ Yields across the euro area are higher again today as investors continue to price in a more aggressive pace of tightening.

The ECB has already accepted that it will need to start raising rates earlier than hoped and has explicitly laid out a timetable for doing so. But as ever, markets are anticipating more from the central bank, with at least 100 basis points of rate hikes priced in for this year. And today’s data will only reinforce that view with the flash HICP reading hitting a record high of 8.1%, while the core reached 3.8%.

And that’s before the latest moves in energy markets are factored in which have been exacerbated by the EU ban on Russian oil imports. The announcement is relatively watered down as has been widely reported in recent weeks in order to get all members on board, most notably Hungary, but it is just another bullish factor in the oil market and a further headache for the ECB.

A bottom in bitcoin?

Bitcoin has made some interesting moves early in the week; first making significant gains on Monday and then breaking above USD 32,000 for the first time in almost three weeks when it broke below USD 30,000. At the time, this was an extremely worrying development for bitcoin but since then it has stabilised around USD 30,000 and has been very choppy. Price action this week will have many asking whether the cryptocurrency has finally bottomed.

For a look at all of today’s economic events, check out our economic calendar:

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam