European equity markets were mixed on Wednesday as investors digested the latest Eurozone inflation figures and looked ahead to key central bank decisions.
Fresh data showed that inflation in the euro area slipped below the European Central Bank’s 2% target in January, helped by lower energy prices and a firmer euro. According to flash estimates from Eurostat, the harmonized index of consumer prices rose 1.7% year on year last month, in line with expectations and down from 2.0% in December.
Core inflation, which strips out volatile items such as energy, food, alcohol and tobacco, edged down slightly to 2.2% from 2.3% in the previous month.
Government bond yields across the region eased modestly after surveys indicated that economic momentum in the Eurozone weakened for a second straight month in January. Final data from S&P Global showed that private sector activity expanded at its slowest pace since September, weighed down by softer growth in services.
The final composite output index came in at 51.3 in January, below both the preliminary estimate and December’s reading of 51.5. While the index remains above the 50 mark—signaling expansion—it points to more subdued growth, albeit for a thirteenth consecutive month.
Attention now turns to central bank meetings on Thursday. The European Central Bank is widely expected to keep interest rates unchanged, with markets focusing on its assessment of the growth and inflation outlook. The Bank of England is also anticipated to leave rates on hold, with any revisions to its economic forecasts likely to be limited.
In equity markets, Germany’s DAX was down 0.4%, while France’s CAC 40 gained 0.9% and the UK’s FTSE 100 rose 1.2%.
On the corporate front, Novo Nordisk (NYSE:NVO) slid sharply in Copenhagen after CEO Mike Doustdar pointed to headwinds from significantly lower U.S. pricing for its blockbuster weight-loss drug Wegovy. Shares in Swiss drugmaker Novartis (NYSE:NVS) also moved lower after the company warned of a decline in profits this year.
Banco Santander (LSE:SAN) fell after the Spanish lender agreed to acquire Webster Financial Corp. in a $12 billion transaction. French bank Credit Agricole (EU:ACA) also dropped following a 39% fall in fourth-quarter profit.
Germany’s Infineon Technologies (TG:IFX) traded lower after announcing plans to step up investment in data-center technology to meet rising demand for artificial intelligence solutions.
On the upside, UK pharmaceutical group GSK (LSE:GSK) advanced after reporting stronger-than-expected fourth-quarter profits. Beazley (LSE:BEZ) shares surged after Zurich Insurance Group reached an agreement in principle on the key financial terms of a potential cash offer for the London-based specialty insurer.
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