European Stocks Largely Flat; Hot U.K. Inflation Negates Corporate Confidence

By Peter Nurse 

Investing.com - European stock markets fluctuated around the flat line Wednesday, with the recent positive tone punctured by hotter-than-expected U.K. inflation which suggests further aggressive monetary tightening ahead.

By 04:00 ET (08:00 GMT), the DAX in Germany traded 0.1% higher, the CAC 40 in France rose 0.1%, while U.K.'s FTSE 100 dropped 0.2%.

The U.K. consumer price index, already at its highest level for decades, jumped to 10.1% for the month of September, as food prices in particular continued to squeeze household incomes.

This increase, matching July’s 40-year high, is likely to ramp up the pressure on the Bank of England to continue aggressively increasing interest rates, adding to the financial difficulties facing U.K. consumers. 

The equivalent CPI data from the Eurozone are scheduled for release later in the session, and are also expected to hit double figures, a sharp rise from August’s annual 9.1%.

The European Central Bank is widely expected to lift its key interest rates by 75 basis points when it next meets at the end of this month, adding to the combined 125 basis points of increases already announced since July.

Fears that central bank tightening will result in a global slowdown have resurfaced with the U.K. inflation numbers, overturning the recent positive sentiment on the back of positive earnings reports and receding worries around systemic risk from Britain's debt markets.

In corporate news, ASML (AS:ASML) stock rose 4.9% after the key equipment supplier to computer chip manufacturers reported better-than-expected third-quarter sales and profit, and record new bookings.

ASOS (LON:ASOS) stock soared 8% after the retailer’s new chief executive officer laid out an extensive plan to reduce stock, slow automation and cut spending in an effort to survive as consumers retrench. 

Just Eat Takeaway (AS:TKWY) stock edged 0.1% higher after Europe's largest meals delivery company reported an underlying quarterly profit even as it warned of a “challenging” consumer backdrop in the months to come. 

Nestle (SIX:NESN) stock fell 0.5% after the world’s largest packaged food company detailed supply chain issues, even after posting “resilient” nine-month sales volumes.

Oil prices stabilized Wednesday above recent two-week lows, helped by signs of consistent U.S. demand, the largest consumer in the world.

U.S. crude oil stocks fell by about 1.3 million barrels for the week ended Oct. 14, according to data from the American Petroleum Institute figures, released Tuesday, suggesting oil consumption in the U.S. remains steady despite headwinds from rising inflation and interest rates.

Official figures from the Energy Information Administration are due later in the session. 

By 04:00 ET, U.S. crude futures traded 0.1% higher at $82.15 a barrel, while the Brent contract fell 0.4% to $89.67. 

Both contracts fell substantially on Tuesday after the White House revealed plans to release 15 million barrels of oil from its Strategic Petroleum Reserve by December.

Additionally, gold futures fell 0.4% to $1,648.45/oz, while EUR/USD traded 0.2% lower at 0.9835.