European Shares Retreat As Rate Cut Hopes Fade

(RTTNews) - European stocks traded lower on Tuesday as traders pared back expectations on near-term rate cuts by the U.S. Federal Reserve and the European Central Bank.

French central bank Governor Francois Villeroy de Galhau said in Davos that it's too early to declare victory over inflation, but the ECB's next move is likely to be an interest rate cut sometime this year.

Separately, Robert Holzmann, Austria's central bank governor, said investors should not "bank" on the ECB cutting rates at all this year.

In economic releases, data showed German consumer price inflation accelerated somewhat amid a rebound in energy costs, as initially estimated in December.

The consumer price index registered an annual increase of 3.7 percent in December, following a 3.2 percent rise in November, Destatis said. That was in line with the flash data published on January 4.

Elsewhere, official data showed that that the U.K. average earnings grew less-than-expected for three months ending November.

Data from the Office for National Statistics showed that the U.K. average earnings including bonuses increased 6.5 percent in three months to November, which was weaker than economists' forecast of 6.8 percent. Excluding bonuses, earnings grew 6.6 percent, matching expectations.

The number of vacancies declined 49,000 to 934,000 in October to December. The jobless rate came in at 4.2 percent in three months to November, the same rate as seen in three months to October.

The pan European STOXX 600 was down 0.4 percent at 472.11 after losing half a percent the previous day.

The German DAX dipped half a percent, France's CAC 40 was down 0.4 percent and the U.K.'s FTSE 100 traded half a percent lower.

German luxury fashion brand HUGO BOSS plunged 11 percent after Q4 EBIT missed estimates.

Air France-KLM Group shares fell over 2 percent in Paris. The airline announced today its decision to withdraw from its existing air cargo agreements with CMA CGM, a French shipping and logistics company, from March 31, 2024.

Vodafone was marginally higher in London after partnering with Microsoft for AI services.

Spirent Communications jumped 7 percent. The telecommunications testing company said that it has started the new fiscal year with a growing orderbook and that it remains well-placed for the year ahead.

Online supermarket Ocado soared 7 percent after saying it would return to positive earnings for the 2022/23 year.