Published: Sat, June 02, 2018
Economy | By

Eurozone inflation in big jump just as uncertainties mount

Eurozone inflation in big jump just as uncertainties mount

On the other hand, the euro is closing into its first weekly gain in seven weeks on Friday after worries over Italy's political crisis ease. Over the weekend, populist parties attempted to form a government, which ultimately failed after Italian president Sergio Mattarella vetoed their choice for finance minister, Paolo Savona, a euroskeptic who once described the eurozone as "a German cage".

Eurozone consumer prices increased at the fastest pace in more than a year in May on energy prices, giving space for the European Central Bank to start scaling back its asset purchase programme.

Italy's two anti-establishment parties - Five Star and The League - held last-minute talks aimed at forming a government yesterday, a move that would avoid repeat elections that could turn into a de-facto referendum on the country's euro membership.

Milan's FTSE MIB was up 1.8% on Wednesday afternoon, having tumbled by 2.7% the previous day.

Events in Italy pushed peripheral euro zone bond yields down for a third straight day, as investors also kept an eye on a second southern European state, Spain, where Prime Minister Mariano Rajoy set to be forced out of office by a no-confidence vote.

Bert Colijn, a Senior Eurozone Economist at ING said eurozone financial market turmoil has returned because of Italian politics this week and weakening economic data over the past months.


"We are not yet at the point where investors refuse to lend money to Italy", said Roberto Coronado of PineBridge Investments.

On the economic front while the euro zone's economy has been slowing down from strong growth a year ago, consumer price data published on Thursday showed inflation jumped to 1.9 percent, well above forecast of 1.6 percent.

The euro bounced back from a 6-1/2-month low after the Italian president rejected a eurosceptic as a key economy minister, as reported by Reuters.

The new jitters about the stability of the euro sent the currency's value against the dollar to its lowest level in nearly a year. Japan's Nikkei rose 0.1 percent. South Korea's Kospi dropped 2.0 per cent to 2,407.95. "It is important Italy has an authoritative voice in forums where the future of the European Union is decided", Visco said, referring to upcoming EU decisions regarding the governance of the bloc, multi-year budgets and the revision of financial rules. It fell to 74.99 yen from 75.61 yen yesterday.

Chinese shares were in the red, too, with the blue-chip index down 0.6 per cent and Hong Kong's Hang Seng index off 0.7 per cent.

ENERGY: U.S. crude oil fell 63 cents to $66.41 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price worldwide oils, shed 38 cents to $75.11 a barrel in London.

Like this: