European stocks run mixed, looking to tighten monetary policy

European stock markets operated without a single direction on Tuesday morning, losing steam after a positive opening, while concerns persisted over the economic effects of the global trend of monetary tightening.

At around 6:30 AM (GMT), the European stock index Stoxx 600 rose a modest 0.26% to 389.76 points, after accumulating a 4.8% decline in the previous three sessions.

Investors in Europe remain reluctant to take risks after the Federal Reserve and a number of central banks in the region aggressively raised interest rates last week in a fresh attempt to tackle persistent inflation, fueling fears of a global recession.

In the next few hours, attention will turn to the comments of the leaders of the Federal Reserve as well as the European Central Bank (ECB). Federal Reserve Chairman Jerome Powell and European Central Bank President Christine Lagarde attend an event at the French Central Bank today.

The UK is also a worrying factor, after the pound hit a historic low yesterday, and the interest rate on the 10-year sovereign bond (Gilt) reached its highest level since 2008 in response to the fiscal plans announced by the British government last week. In morning trading, the pound partially recovered amid the dollar’s depreciation, while the yield on British Treasuries slipped.

In a statement yesterday, the Bank of England (BoE) said it was assessing the situation in financial markets, but made it clear that it would ultimately only act during its next monetary policy meeting. Last Thursday (22), the Bank of England raised the key interest rate by 50 basis points.

Also on the radar is Italy, where the leader of the Italian radical right, Giorgia Meloni, began negotiations yesterday to form a ruling coalition, after a broad victory in the legislative elections on Sunday (25).

At 6:45 AM (GMT), the London Stock Exchange was down 0.35%, while the Frankfurt Stock Exchange was up 0.31% and Paris advanced by 0.28%. Milan and Madrid fell 0.60% and 0.11%, respectively, but Lisbon showed a rise of 1.24%.