European stock markets moved lower on Thursday at the start of October and the fourth quarter, as investors continued to assess higher energy costs, inflation pressures and developments in the Middle East.
The pan-European STOXX 600, Germany’s DAX and France’s CAC 40 each fell 0.6%, while the UK’s FTSE 100 declined 1.1%.
Softer-than-expected US economic data provided some support to global markets, although this was offset by inflation concerns in Europe and uncertainty surrounding negotiations between the United States and Iran.
Middle East Developments Keep Energy Prices in Focus
Negotiations between the United States and Iran aimed at ending the seven-month conflict have stalled, with crude oil prices remaining elevated.
Higher energy costs have continued to affect inflation across the eurozone. Preliminary September data showed consumer price inflation accelerating more than expected in several major economies, including France, Italy and Spain, amid increases in petrol, diesel and wholesale gas prices.
The higher inflation readings have increased market attention on the European Central Bank’s monetary policy outlook and the possibility that restrictive policy could remain in place for longer.
Markets Assess Softer US Economic Data
Investors were also assessing weaker-than-expected US economic data released during the previous session.
US Personal Consumption Expenditures inflation for August came in below market forecasts, reducing some of the immediate upward pressure on global government bond yields.
However, geopolitical uncertainty and higher inflation readings in Europe coincided with continued weakness across European equity markets.
Investors are also awaiting further regional economic data and corporate earnings releases as the fourth quarter gets underway.
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