United States

European Stocks Close Higher Despite Inflation Fears; Marks & Spencer Up 16%

A customer selects goods at a supermarket in New York, the United States, Aug. 11, 2021.
Wang Ying | Xinhua News Agency | Getty Images
  • The pan-European Stoxx 600 closed up by 0.2% provisionally, with media shares climbing 1.3% to lead the gains.
  • Investors digested earnings from a slew of European companies including EDF, Allianz and Marks & Spencer.
  • The U.S. consumer price index showed a year-on-year increase of 6.2% in October, the sharpest in 30 years.

LONDON — European stocks closed slightly higher on Wednesday as market participants digested a slew of earnings and hotter-than-expected inflation readings from the U.S.

The pan-European Stoxx 600 closed up by 0.2% provisionally, with media shares climbing 1.3% to lead the gains while tech shares on the other hand sank 1.3%.

Investors are assessing the release of the latest U.S. consumer price index, a key inflation reading, on Wednesday. The consumer price index showed a year-on-year increase of 6.2% in October, the sharpest in 30 years.

Core CPI, which excludes food and energy and is the Federal Reserve's preferred measure of inflation, rose by 0.6% month-on-month and 4.6% annually, also slightly exceeding economist expectations.

Hussain Mehdi, macro and investment strategist at HSBC Asset Management, said although the bank expects the period of high inflation to be "transitory," there is scope for the near-term peak in inflation to remain "uncomfortably high."

"This implies the risk of a faster Fed taper, particularly if longer-term inflation expectations edge up to undesirable levels and wage growth continues to accelerate, and the potential for increased market volatility," Mehdi added.

The U.S. October producer price index came in as expected Tuesday, with PPI rising 0.6% month-on-month, in line with estimates. Wholesale prices jumped 8.6% in October from a year ago, however, the hottest annual pace on record in almost 11 years.

U.S. equities were slightly lower on Wednesday following the release of the inflation numbers.

In Asia, major markets fell, also on the back of fears around inflation. China's consumer price index for October rose 1.5% from last year, against expectations in a Reuters poll for a 1.4% increase. Producer prices, however, rose more than expected.

Back in Europe, German consumer price index (CPI) inflation came in at 4.5% year-on-year in October and 0.5% month-on-month, the federal statistics office said Wednesday.

Earnings in focus

In a busy day for earnings in Europe, reports before the bell came from Credit Agricole, Engie, Alstom, EDF, Allianz, Continental, Dialog, E.On, Infineon, Siemens Energy, ABN Amro, Thomas Cook and Marks & Spencer, among others.

Marks & Spencer shares surged 16.5% after the British retailer posted strong third-quarter earnings.

ITV shares jumped 15.1% after the U.K. media company forecast record full-year advertising sales in 2021.

At the bottom of the European blue chip index, British advertising agency S4 Capital slid 10.3% on the back of its trading update.

Adidas shares dropped 3.7% after the German sportswear giant trimmed its full-year forecast due to supply chain constraints.

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- CNBC's Ryan Browne, Tanaya Macheel and Eustance Huang contributed to this market report.

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