European stock markets fell due to concerns about interest rate cuts. Davos Continues By Investing.com

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Investing.com – European stocks fell on Tuesday on concerns that interest rates will remain higher than expected as the annual World Economic Forum continues in Davos.

At 03:15 ET (08:15 GMT), German shares were down 0.7%, French shares were down 0.6% and UK shares were down 0.4%.

ECB withdraws interest rate cut expectations

Europe’s risk appetite remains fragile following a backlash from European officials that runs counter to market expectations that the European Central Bank will start lowering borrowing costs early this year.

“It is too early to talk about cuts and inflation is too high,” Joachim Nagel, a known hawkish ECB policy member, said on Monday. “I would like to see new data. We will wait for the next board meeting.”

The euro zone reversed six consecutive months of decline and rose 2.9% in December from 2.4% the previous month.

Austrian central bank governor Robert Holtzmann also said investors should not ‘expect’ a rate cut from the ECB this year, given the rising costs of shipping through the Suez Canal due to the Red Sea dispute.

German inflation rises in December

Data released Tuesday morning showed the rate rose to 3.7% in December, up from 3.2% a year earlier in November, showing ECB officials are struggling to decide when to cut interest rates.

The UK’s rate remained unchanged at 4.2% in November, with growth falling to 6.6% from 7.2%, providing some support to the Bank of England’s goal of lowering inflation to its target level.

The second half of the session will highlight Europe Day.

Leaders Gather in Davos

The World Economic Forum continues in Davos on Tuesday, with speeches scheduled by Chinese Premier Li Qiang, European Commission President Ursula von der Leyen, US National Security Advisor Jake Sullivan and Ukrainian President Volodymyr Zelenskiy.

Increase revenue from Experian posts

In the corporate sector, Experian (OTC:) shares rose 2.7% after the credit data company reported a 9% rise in third-quarter revenue, helped by strong demand for new products.

Lindt & Spruengli (SIX:) shares rose 4.2% after the Swiss chocolate maker reported a more than 10% rise in 2023 sales than market expectations, helped by higher product prices and strong praline sales across the market.

Vodafone (NASDAQ:) shares fell after the British telco agreed to enter into a 10-year partnership with Microsoft (NASDAQ:) to provide generative AI, digital, enterprise and cloud services to more than 300 million businesses and consumers across Europe and Africa. It rose 0.6%. market.

This week the focus will be on Goldman Sachs (NYSE:) and the U.S. banking sector. Morgan Stanley (NYSE:) will report later in the session.

Concerns over supply from the Middle East remain

Oil prices fell on Tuesday, but losses were limited as concerns about supply disruptions in the Middle East remained a key support point as major shipping lines avoided key shipping routes between Europe and Asia.

By 03:15 ET, futures were trading down 0.4% at $72.47 a barrel, while the contract was trading down 0.1% at $78.09 a barrel.

The U.S. market closure on Monday limited trading volume, which means U.S. Energy Information Administration officials will arrive on Thursday with a day delay, while industry data will arrive on Wednesday.

It also traded unchanged at $2,051.80 per ounce, or 0.3% lower at 1.0914.