Rate fears return as oil prices rise
Fears of higher interest rates have returned to the market as oil prices continue to climb and the European Central Bank warned that it expects additional inflationary pressure from elevated energy costs.
At the same time, stronger-than-expected US labour market data weighed on sentiment by giving the Federal Reserve greater room to tighten monetary policy without significantly undermining economic growth. Adding to the cautious mood, a series of mixed corporate earnings reports prompted investors to take profits across the major equity indices.
SAP helps Frankfurt stabilise
Asian markets picked up the negative lead overnight, with equities in Japan, South Korea and China moving lower. Frankfurt, however, looks set for a more stable start following yesterday's decline in the DAX.
Investors were encouraged by SAP's quarterly results, which came in ahead of expectations. The German software giant once again demonstrated strong momentum in its high-margin cloud business.
Automakers disappoint as restructuring costs weigh
By contrast, earnings from Porsche and Volkswagen disappointed as expected, puncturing the recent optimism surrounding the European automotive sector. Both companies continue to grapple with substantial restructuring costs, delaying the recovery investors had hoped for.
