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(Bloomberg) — European shares were subdued, weighed down by the construction sector, after Sika AG dropped 9.5% on weaker-than-expected results. The latest US inflation reading failed to change the outlook for Federal Reserve interest rates.
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The Stoxx Europe 600 Index was down about 0.1% by the close. Energy shares outperformed, while telecom and auto stocks were among the biggest laggards.
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Orsted A/S jumped 5.4% after a US judge ruled the renewable energy producer can resume building a wind-farm project off the coast of Rhode Island while it challenges the government’s latest stop-work order.
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Europe’s main equity benchmark has had a stellar start to the year, prompting debate over how much good news is already priced in. The gauge’s 14-day relative strength index has climbed above 80, a reading that suggests that a period of consolidation lies ahead or that a market top may not be far off.
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On Tuesday, data showed underlying US inflation rose in December by less than expected. While the figures bolstered expectations for the Fed to lower interest rates by mid-year, there were minimal odds of action later this month.
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“Today’s report did little to suggest that excessive price pressures will ease anytime soon,” said Atakan Bakiskan, US economist at Berenberg. “The recent criminal investigation could give Fed officials further reasons to avoid any additional rate cuts in the near term.”
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For more on equity markets:
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- A Case Builds Against a Too Hot European Market: Taking Stock
- M&A Watch Europe: Teneo, Engineering, Smith & Nephew, Ams-Osram
- Middle East IPO Rebound Hinges on Fate of Key Deals: ECM Watch
- US Stock Futures Fall; American Express, Walmart Fall
- Unhealthy Hiring: The London Rush
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—With assistance from Michael Msika, Levin Stamm and Sagarika Jaisinghani.
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