Investing.com - European stock markets drifted lower Tuesday, as investors fretted about slowing global growth and future central bank policy decisions.
Data released earlier in the session showed that German factory orders unexpectedly dropped 0.4% in April, illustrating the dimming prospects for Europe’s largest economy after it endured the first recession since the pandemic over the winter.
The final composite PMI index, seen as a good gauge of overall economic health, released Monday, showed that business activity in the eurozone was shored up last month by the bloc's dominant services industry offsetting a deepening decline in the manufacturing sector.
Across the pond, U.S. service sector activity barely grew in May, suggesting the recent strong growth in this important sector may now be running out of steam in the face of rising interest rates and high inflation.
Markets are increasingly looking for the Federal Reserve to pause rate hikes next week, but the European Central Bank appears to still be months away from following suit with inflation remaining a major issue.
President Christine Lagarde on Monday cemented expectations of more rate hikes–the ECB also meets next week–by stating that it was too early to call a peak in core inflation despite "signs of moderation".
Australia's central bank raised interest rates by 25 basis points overnight, warning that inflation still remained too high in the country and that more policy tightening may still be in order this year.
In corporate news, GSK (LON:GSK) stock rose 0.3% after the pharma giant's cancer drug, Jemperli, received approval from the U.S. Food and Drug Administration for use.
Associated British Foods (LON:ABF) stock fell 0.2% after the owner of Primark, as well as a number of foods and ingredients businesses, said it would buy dairy technology company National Milk Records for £48 million (£1 = $1.2441) to boost its agri-food unit.
British American Tobacco (LON:BATS) stock rose 0.8% after the tobacco group stuck with its annual revenue and profit forecasts, betting on steady demand for its vaping and oral nicotine products.
Oil prices edged lower Tuesday, handing back some of the previous session’s sharp gains as traders returned their attention to the weakening U.S. economic backdrop after the Saudi production cut.
Saudi Arabia, the world’s top exporter, pledged over the weekend an additional cut of around one million barrels per day from July compared with its production levels in May, in an attempt to boost slumping crude prices.