European stocks edge higher; H&M soars on quarterly profit

Investing.com - European stock markets edged higher in tight trading ranges Wednesday, as investors continued to digest elevated inflation levels, soaring bond yields and the health of the global economy.

At 03:55 ET (07:55 GMT), the DAX index in Germany traded 0.1% higher, the CAC 40 in France climbed 0.2% and FTSE 100 in the U.K. rose 0.1%.

Negative handover from Wall Street

Despite Wednesday's small gains, the nerves of European investors remain frayed over the prospect of interest rates staying higher for longer, with a surge in U.S. Treasury yields resulting in sharp losses on Wall Street overnight.

The three major U.S. equity indexes all lost more than 1% on Tuesday, with the Dow Jones Industrial Average posting its worst day since March and the S&P 500 and Nasdaq both on track for their biggest monthly losses this year of 5% and 7%, respectively.

However, there was some positive news to digest in Asia, as data showed that Chinese industrial profits rebounded sharply in August, helping narrow their declines for the year to date. 

China is expected to achieve economic growth of slightly more than 5% this year, an adviser to the central bank said on Wednesday, helping boost sentiment given the importance of the Chinese export market for many of Europe's largest companies.

ECB to keep rates high for longer

Back in Europe, Germany’s 10-year bond yield has also climbed to its highest point since 2011, dragged higher in the wake of the U.S. move.

The European Central Bank hinted at a pause in its tightening cycle when it hiked interest rates earlier this month, but President Christine Lagarde indicated earlier this week that the policy rates would have to be maintained for a sufficiently long duration to make a substantial contribution towards conquering inflation.

The September CPI release for the eurozone is scheduled for Friday, and is expected to see falls in both the annual headline and core releases.

German GfK index weakens

The forward-looking German GfK consumer climate index fell to -26.5 in October, from a revised lower -25.6 the prior month, indicating that the confidence in the eurozone’s largest economy remains fragile.

"This means that the chances of a recovery in consumer sentiment are likely to have fallen to zero before the end of the year," said GfK analyst Rolf Buerkl.

French consumer confidence also fell in September, dropping to 83 from 85 the prior month.

H&M quarterly profit rises, but sales seen lower in September

H&M (ST:HMb) stock rose 5.5% after the world's second largest fashion retailer reported a rise in its quarterly profit, helped by cost cutting. That said, H&M said unusually hot weather in many of its European markets had delayed the start of the autumn shopping season, sending sales lower in September.

Crude rises after industry U.S. stockpiles release

Oil prices rose Wednesday as markets focused on supply tightness following the release of the latest U.S. inventories data heading into winter.

Industry data from the American Petroleum Institute released on Tuesday showed U.S. crude oil stockpiles rose last week by about 1.6 million barrels, against expectations for a small drop.

However, gasoline and distillate inventories both fell, indicating that fuel demand in the country remained steady, despite the end of the travel-heavy summer season. 

The official inventory data, from the Energy Information Administration, is due later on Wednesday. 

By 03:55 ET, the U.S. crude futures traded 1.1% higher at $91.36 a barrel, while the Brent contract climbed 0.7% to $93.08. 

Additionally, gold futures fell 0.3% to $1,914.70/oz, while EUR/USD traded 0.1% lower at 1.0567.