European markets saw slight gains on Wednesday as traders focused on significant U.S. inflation figures and the approaching European Central Bank policy meeting. The pan-European Stoxx 600 index was up by 0.3%, with the majority of sectors experiencing positive movement. Media stocks were the standout performers, rising by 1.5%, whereas retail stocks saw a decline of 2.3%.
Shares of the Spanish apparel giant Inditex experienced a 6% drop after the owner of Zara released its revenue results. The retailer announced that its revenues from November 1 to December 9 surged by 9% compared to the same timeframe last year when adjusted for constant currency. Meanwhile, German e-commerce site Zalando plummeted by as much as 10% before bouncing back to a 0.8% increase.
In the U.S., the Consumer Price Index (CPI) for November, which monitors a variety of goods and services, met market expectations. This report indicated a 0.3% increase from October and a year-on-year rise of 2.7%. When excluding the often unpredictable food and energy sectors, the core CPI also grew by 0.3% month-over-month and 3.3% annually. This CPI data is anticipated to keep the Federal Reserve on course for potential interest rate cuts during their meeting next week in December.
U.S. stock futures exhibited mixed responses following the inflation data release, as major Wall Street indexes had fallen the previous Tuesday in anticipation of the numbers.
Investors Gear Up for U.S. Inflation Insights
Henning Gebhardt, a fund manager and partner at Hollyhedge Consult, remarked that Germany’s forthcoming government ought to prioritize substantial changes over mere adjustments to its fiscal regulations.
His statements arise in the wake of a report suggesting that German Chancellor Olaf Scholz is poised to initiate a vote of confidence in parliament, a procedural action that could lead to new elections. Gebhardt expressed doubt regarding the future German government’s capacity to advocate for more expansive fiscal policies post-election, highlighting the challenges of modifying the nation’s debt brake, known as Schuldenbremse, without achieving a two-thirds majority in the constitutional assembly.
Both the United Kingdom and the European Union are taking measures to safeguard against potential trade and defense tensions with the incoming U.S. administration under Donald Trump. U.K. Chancellor Rachel Reeves made a trip to Brussels for discussions with her EU counterparts. Eurogroup President Paschal Donohoe expressed hope that this would mark the initial of “many” collaborative meetings.
Daniele Antonucci, chief investment officer at Quintet Private Bank, noted that potential upward pressures on U.S. inflation seem “relatively moderate” in the near term. His remarks precede the release of U.S. inflation data, which could significantly impact the Federal Reserve’s interest rate strategies in the upcoming Dec. 17-18 meeting.
Sweden’s financial watchdog has penalized Klarna Bank with a fine of 500 million Swedish krona (approximately $45.5 million) due to breaches of anti-money laundering laws. Investigations revealed Klarna’s non-compliance with several essential regulations between April 2021 and March 2022. Shares of Adidas declined following a police raid at the company’s German headquarters.
The firm’s shares were down by as much as 1.5% during trading on Wednesday.
