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Overview of European Stock Markets on Wednesday

On Wednesday, European stock markets were mostly flat, with the STOXX 600 remaining unchanged.

Brokers checking the screens
Brokers checking the screens

Meanwhile, the UK's FTSE 100 saw an increase of 0.7%. This was due in part to the market playing catch-up after the long Christmas holiday weekend, as well as a jump in commodity-linked and China-exposed stocks. The FTSE 100 has been boosted this year by rising oil and base metals prices amid the Russia-Ukraine conflict.

UK Market Outperforms Despite Global Equity Pressures

Despite global equity markets facing pressures from rising interest rates, inflation, and the threat of recession, the UK market may end the year in positive territory, according to Victoria Scholar, head of investment at Interactive Investor. This is partly due to the FTSE 100's exposure to commodities, a rally in copper prices, and an increase in demand for London-listed financials with ties to China, such as Prudential and HSBC.

Tech Sector Weighs on STOXX 600

The technology sector was a drag on the STOXX 600 on Wednesday, mirroring the overnight decline of its US counterparts. This was due to rising yields putting pressure on interest rate-sensitive shares, a trend that has persisted throughout the year. As a result, tech shares have fallen 28.4% in 2022.

Germany's Infineon also saw a 1.1% drop, due in part to broader tech movements and the company's CEO stating that it is prepared to spend several billion euros on the right acquisition target.

Thin Trading Volumes and Disruptions Affect Airlines

Thin trading volumes also influenced market moves on Wednesday. In addition, Italy's antitrust regulator announced an inquiry into possible price-fixing for flights to and from Sicily by airlines including Ryanair, Wizz Air, and EasyJet. As a result, shares in these airlines fell between 1.2% and 2%.

Victoria Scholar noted that while 2022 was expected to mark a comeback for international travel with a significant increase in demand post-pandemic, disruptions including baggage handling issues, cancellations, the Ukraine conflict, strikes, and general disruption have caused these stocks to decline year-to-date, leading to another difficult year for the airline industry.