European markets climb as investors anticipate US inflation data; Stoxx 600 up 1%

LONDON — European stocks advanced Wednesday morning as investors eagerly awaited the latest inflation reading.

The pan-European Stoxx 600 gained 1.2% by mid-morning. Autos jumped 2.9% to lead the gains, with all sectors trading in positive territory except for health care, which fell 0.9%.

The positive morning in Europe came after choppy trading sessions in the region and in markets further afield.

European stocks rose on Tuesday as global markets rebounded from a broad selloff in recent days, largely on worries about inflation and rising interest rates – and the potential for a global recession.

On Tuesday, U.S. stocks tumbled as major averages struggled to recover from three days of strong selling that took the S&P 500 to its lowest level in more than a year.

Europe, we believe, is at the center of the storm. We think the gas disturbances are likely to get worse.

Salman Ahmad

Global Head of Macroeconomics and Strategic Asset Allocation, Fidelity International

Investors are eagerly awaiting US inflation data for April on Wednesday, which is expected to be slightly lower than March’s 8.5% and could signal that inflation has peaked.

Recent market volatility has been fueled by investor concerns about rising interest rates and question marks over how aggressively the Federal Reserve will act to rein in rising inflation. Additionally, investors continue to watch the ongoing conflict in Ukraine and lockdowns in China.

European natural gas prices jumped on Wednesday after Ukraine’s public grid operator suspended Russian gas flows through a key entry point.

Ukraine’s gas TSO on Tuesday announced a force majeure event at its Sokhranivka gas metering station and Novopskov border compressor station, both located in Russian-occupied territory in eastern Ukraine and representing almost a third of gas flows from Russia to Europe.

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Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, told CNBC on Wednesday that his team was underweight equities across the board, but favored the United States over the US. Europe.

“We think Europe is at the center of the storm. We think the gas disruptions are likely to get worse,” he added.

Overnight, stocks in Asia-Pacific were mixed as investors watched the market’s reaction to the release of stronger-than-expected Chinese inflation data for April. Meanwhile, US stock futures were higher in early morning trading on Wednesday ahead of the upcoming US inflation data.

In Europe, German inflation in April reached an annual rate of 7.4%, its highest level since 1981.

Earnings for a wide range of companies were released before the bell, including Alstom, Commerzbank, Continental, E.On, Siemens Energy, Thyssenkrupp and Tui.

British catering company Compass Group jumped 9.6% after an upbeat earnings report, while German engineering and steel conglomerate Thyssenkrupp also gained more than 10% after beating expectations.

Shares of Swedish Match soared 8.7%, building on Tuesday’s rise after the tobacco company agreed to a $16 billion sale to US giant Philip Morris International.

British emergency home repair company HomeServe rebounded more than 11% after Bloomberg reported that Canadian firm Brookfield Asset Management was set to take control of the business.

At the bottom of the Stoxx 600, German biotech company Evotec plunged more than 14% after its first quarter results.

Shares of German drugmaker Bayer fell 6.5% after US President Joe Biden’s administration asked the US Supreme Court not to consider the company’s appeal to dismiss the claims of customers alleging its Roundup weed killer causes cancer.

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