European markets rise; German inflation declines; China lowers interest rates

            Financial MarketsNews                                                                    DATED:-21-08-2023

Even after China's smaller-than-expected rate cut, producer prices in Germany fell significantly, which helped lift European stock markets on Monday.

The CAC 40 in France surged 0.8%, the DAX index in Germany traded 0.5% higher, and the FTSE 100 in the United Kingdom increased 0.2% as of 03:35 ET (07:35 GMT).

German producer costs decline

German producer prices fell 1.1% in July over the previous month, marking a significant annual decline of 6.0% and a sign that inflationary pressures are easing in the largest economy in the eurozone.

The eurozone's overall growth is being severely hampered by Germany's economic issues, which are threatening to plunge the region into a recession and force the European Central Bank to alter its policy.

A break in the central bank's protracted cycle of rate hikes was alluded to by ECB President Christine Lagarde at its most recent meeting in July, and her address at Jackson Hole on Friday will be closely examined for hints on the central bank's next action in September.

Nevertheless, investors will be looking for clarity on the global economy and the future course of interest rates from the world's most significant central bank in Jerome Powell's address, which will be given the same day and serve as the symposium's high point.

China's modest rate decrease disappoints.

UK housing market declines

Back in Europe, data released late Sunday showed that, according to real estate business Rightmove, U.K. home prices dropped 1.9% year over year in August, which was the fastest monthly loss since 2018.

After the British home builder Crest Nicholson (LON:CRST) issued a profit warning and claimed that the summer's worsening trading circumstances were caused by high inflation and rising interest rates, the company's stock fell more than 12%.

On limited supply, crude moves higher.

The Chinese rate drop and anticipation of lower output from a group of major producers in August both contributed to the rise in oil prices on Monday, which followed last week's selling.

On worries that rising U.S. interest rates and China's sluggish economic recovery may affect oil consumption, the crude market declined last week, snapping a 7-week winning streak.

Nevertheless, the likelihood of tighter supplies following significant output cuts from Saudi Arabia and Russia this year—the two major producers in the collective known as OPEC+—has aided in supporting prices.

By 03:35 ET, the price of U.S. crude futures had increased by 0.9% to $81.36 per barrel, while the price of Brent had increased by 0.9% to $85.54.

Along with this, gold futures increased by 0.1% to $1,918.25/oz, and the EUR/USD traded 0.1% higher at 1.0886.