Investors await US inflation data for April

LONDON – European stocks closed higher on Wednesday, with investors largely ignoring hotter-than-expected inflation data from the US.

The pan-European Stoxx 600 provisionally closed 1.6% higher, with autos rising 3.6% to lead gains as all sectors traded in positive territory except healthcare, which fell 1.2%.

The gains in Europe come after some choppy trading sessions in the region and in markets further afield. European stocks rose on Tuesday as global markets rebounded from a sell-off in recent days, fueled mainly by concerns about inflation and rising interest rates, and the potential for a global recession.

On Wall Street, US stocks were mostly higher on Wednesday despite the fact that the consumer price index for April showed an 8.3% rise in prices, higher than the 8.1% rise expected by economists surveyed by Dow. jones. The price increase remained close to the highest pace in 40 years of 8.5% seen in March.

We believe that Europe is at the center of the storm. We believe gas disruptions are likely to get worse.

salman ahmed

Global Head of Macro and Strategic Asset Allocation, Fidelity International

Recent market volatility has been fueled by investor concerns about rising interest rates and questions about how aggressively the Federal Reserve will act to curb rising inflation. Additionally, investors continue to monitor the ongoing conflict in Ukraine and lockdowns in China.

Natural gas prices in Europe rose on Wednesday after Ukraine’s state-owned grid operator suspended Russian gas flows through a key entry point.

Ukraine’s gas TSO on Tuesday announced force majeure at its Sokhranivka gas metering station and Novopskov border compressor station, both located in Russian-occupied territory in eastern Ukraine and accounting for almost a third of Russia’s gas flows. to Europe.

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Salman Ahmed, global head of strategic and macro asset allocation at Fidelity International, told CNBC on Wednesday that his team was underweight equities across the board, but favored the US over Europe.

“We think Europe is at the center of the storm. We think gas disruptions are likely to get worse,” he added.

Overnight, stocks in Asia-Pacific were mixed as investors reacted to the release of higher-than-expected Chinese inflation data for April.

In Europe, German inflation in April rose to 7.4% annually, its highest since 1981.

Earnings from a wide range of companies were released before the bell, including Alstom, Commerzbank, Continental, E.On, Siemens Energy, Thyssenkrupp and Tui.

Shares of British emergency home repair firm HomeServe rebounded more than 13% after Bloomberg reported that Canada’s Brookfield Asset Management was poised to take over the company.

German steel and engineering conglomerate Thyssenkrupp gained 11% after beating earnings expectations.

Shares of Swedish Match rose 9%, riding Tuesday’s rally after the tobacco company agreed to a $16 billion sale to US giant Philip Morris International.

German biotech firm Evotec fell more than 10% after its first-quarter results.

Shares of German drugmaker Bayer fell 6% after US President Joe Biden’s administration asked the US Supreme Court not to consider the company’s appeal to dismiss the claims of customers who allege that their Roundup herbicide causes cancer.

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