European markets advance as investors await Fed minutes

French inflation eased unexpectedly

The skyline from the Arc de Triomphe in Paris, France.

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Inflation in France eased to 6.7% in December from a record high of 7.1% the previous month, preliminary figures published on Wednesday morning showed.

Economists polled by Reuters forecast year-on-year harmonized inflation, adjusted for comparisons across the euro area, to reach 7.2%.

The most significant decrease was energy, where prices increased by 15.1% annually, from 18.4% in November.

That follows inflation slowing more than expected in Germany, which on Tuesday reported that the HICP fell to 9.6% from 11.3%; and in Spain, which last week recorded a fall of 5.8% from 6.7%.

Analysts are looking for signs that inflation is rising in the main economies of the euro zone; and whether it will influence the European Central Bank, which previously said interest rates should be “significantly” higher.

ING analysts say the road to a lower inflation rate is not easy, and the outlook remains dependent on factors such as warmer weather and continued pipeline pressure affecting energy prices; the war and challenges in the agricultural sector affecting food prices; and government support programs.

“[Germany’s] The inflation figures are not a relief, however, only a reminder that inflation in the eurozone is primarily an energy price event,” they said in a note. “The ECB does not and will not base its decisions in its policy of more flexible energy prices.”

They expect an increase of a total of 100 basis points in the next two meetings and updated their macro forecasts in March.

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Italy will report inflation numbers on Thursday, followed by a flash estimate for the euro area on Friday.

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Annual inflation in Switzerland at 2.8% in 2022

Consumer prices in Switzerland increased 2.8% year-on-year and eased by 0.2% in the month of December, the Swiss Federal Statistical Office said today.

It sees Swiss inflation averaging 2.8% in 2022, up from 0.6% in 2021. It attributes the annual increase to higher costs of petroleum products, gas, cars and housing rentals, which offset the reduction in the price of medicines and fixed-line and mobile communication.

Stocks on the move: BKW up 4%, Tenaris down 5%

Swiss electricity supplier BKW jumped 6% in early trade to lead the Stoxx 600 after projecting an “outstanding” full-year result for 2022.

Italian steel pipe manufacturer Tenaris fell 5% below the European blue chip index.

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CNBC Pro: Analysts see these 10 global renewable energy stocks rising despite higher rates with one offering 50% upside

Rising energy costs are encouraging investment in renewable energy around the world.

Swiss investment bank UBS has named 10 prominent renewable energy players that are taking advantage of the trend and are set to outperform next year.

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CNBC Pro: Wall Street is bullish on this chip giant, with Morgan Stanley giving it a 55% upside

The once-hot chip sector suffered in 2022, but Wall Street looks to be more optimistic about semiconductor stocks for the coming year.

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Recently, many pros have encouraged investors to take a longer-term view of the sector, due to the importance of chips in many key secular trends.

Analysts name a stock in particular that they are concerned about, citing its earnings potential and future earnings.

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US will avoid recession in 2023, says Goldman Sachs

Goldman Sachs has an out-of-consensus forecast for the US economy in 2023.

“Our economists continue to believe that the US will avoid recession because the Fed has successfully engineered a soft landing in the economy,” analysts wrote on Tuesday.

“This out-of-consensus forecast partly reflects our view that a period of low potential growth will be sufficient to gradually rebalance the labor market and moderate wage and wage pressures. at the price,” the note. “But it also reflects our analysis showing that the drag from fiscal and monetary policy tightening will decrease significantly next year, contrary to the consensus view that the lagged effects of interest rate increases will be the cause to recession in 2023.”

Additionally, the bank today raised its 4Q22 GDP growth forecast by 10bp to +2.1% on the back of a surprisingly strong November Construction Spending release.

“The disconnect between the strength of the U.S. economy in 2022 and the downdraft experienced by stocks has been a key narrative over the past year,” Goldman said. “And, whether this disconnect continues, or the economy matches the downdraft in the market, or the market rebounds after a soft landing in the economy will be at least part of the narrative in 2023.”

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—Carmen Reinicke

CNBC Pro screens for low volatility stocks amid fears of a bumpy ride ahead

Stock markets endured a terrible 2022 as major indexes clocked their worst performances in more than a decade.

As market pros warn investors of bumpy times ahead, CNBC Pro uses FactSet data to examine the low-volatility stocks that not only beat the market in 2022 but are expected to rise yet this year.

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European markets: Here are the opening calls

European markets are headed for a higher open Wednesday as investors await the latest US Federal Reserve minutes, looking for signs of more interest to come.

The UK FTSE 100 index is expected to open 11 points higher at 7,570, in Germany DAX 28 points higher than 14,227, France’s CAC rose 9 points to 6,643 and Italy FTSE MIB increased by 31 points to 24,449, according to data from IG.

In Europe on Tuesday, markets closed higher, buoyed after Germany published lower-than-expected inflation figures for December, up 9.6% year-on-year. Inflation figures from France are due on Wednesday.

— Holly Elliott


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