European markets close higher as investors look ahead to U.S. inflation data

European markets close higher as investors look ahead to U.S. inflation data

European stocks close 0.4% higher as recession optimism grows

Europe’s Stoxx 600 index ended the session 0.4% higher, regaining most of the ground it lost Tuesday and putting it back near its eight-month high.

Gains were led by retail stocks, up 2.2%, followed by financial services and chemicals, both up over 1%.

Germany’s DAX index climbed 1.2% to its highest level since February amid growing optimism about its production and growth prospects for the year.

— Jenni Reid

Stocks on the move: Wacker Chemie up 9%, Aroundtown up 8%

German chemicals company Wacker Chemie was up 8.8% in late afternoon trade after UBS analysts said it should outperform average analyst estimates in the next quarter and reiterated a “buy” rating on the stock.

It was joined at the top of the Stoxx 600 index by European real estate developer Aroundtown, which gained 8%, putting it up 21.5% in 2023 so far — though it remains down by around a half on a one-year basis.

U.K. insurer Direct Line remained the worst performer, plunging 24% after announcing it would ditch its final dividend for 2022. It follows a surge of December claims due to bad weather, inflation and supply chain issues taking it to an underwriting loss for the year.

— Jenni Reid

Long-dated U.K. bond yields fall 15 basis points

Long-dated U.K. government bonds yields fell sharply, hitting their lowest level since Dec. 19.

Yields on 10-year, 20-year and 30-year gilts were all down around 15 basis points at 2:15 p.m. London time.

Yields move inversely to prices.

— Jenni Reid

The biggest risk factor for UK stocks right now is that we don’t go into recession, strategist says

The market is so certain we’re headed for recession that if we don’t, that’s a real risk for U.K. equities, Roger Lee, head of U.K. equity strategy at Investec, told CNBC’s “Squawk Box Europe.”

LVMH names new Louis Vuitton CEO; Arnault’s daughter to head Dior

LVMH chairman and CEO Bernard Arnault has changed the top leadership team of his luxury goods empire, naming his daughter Delphine to lead the Christian Dior brand.

The former head of Dior, Pietro Beccari will replace long-time Louis Vuitton CEO Michael Burke.

“Both are well respected; logical promotions within the group,” Credit Suisse analyst Natasha Brilliant told Reuters.

LVMH is Europe’s most valuable company at 380 billion euros ($408 billion), Reuters reports, and firm shares rose as much as 2% to hit new highs on news of the leadership reshuffle.

— Hannah Ward-Glenton

No signs of de-anchored inflation expectations, ECB policymaker says

There are no signs of de-anchored market expectations on inflation, according to European Central Bank policymaker Robert Holzmann.

The statement was featured on a slide alongside a speech to a Euromoney conference on Central and Eastern Europe.

In a slide referencing recent rate increases, Holzmann added that “[p]olicy interest rates will
have to rise significantly further to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target.”

— Hannah Ward-Glenton

French economy is holding up better than expected and should avoid hard landing: Bank of France

The French economy is resisting better than expected and should be able to avoid a “hard landing,” Bank of France head Francois Villeroy de Galhau said Wednesday.

“Activity in France is showing a better than expected resistance,” Villeroy told Radio Classique.

The Bank of France said the French economy probably grew slightly in the final quarter of last year as business activity saw an uptick following refinery strikes in October and more nuclear plants coming back online.

— Hannah Ward-Glenton

British insurer Direct Line shares down 29% after profit warning

Shares of Direct Line plummeted 29% after the British insurer scrapped its final dividend for 2022, putting it on track for its biggest one-day drop on record.

The company said it had experienced a surge in claims during a period of bad weather in Britain in December, which led the insurer to an underwriting loss for the year.

Inflationary pressures and supply chain issues have made vehicle repairs more expensive, while unexpected hot and cold weather spells increased demand, Direct Line said.

“The Board recognises the importance of the dividend to our shareholders, and continues to take actions to restore balance sheet resilience and dividend capacity as a priority, consistent with our track record of delivering returns for shareholders,” CEO Penny James said in a statement.

— Hannah Ward-Glenton This global ETF is the only fund that’s posted gains every year for the past decade

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It is the sole fund of almost 7,000 equities ETFs worldwide screened by not to have a single year of negative returns between Jan. 1, 2013, and Dec. 31, 2022.

It has also offered investors a 14% compounded annual growth rate over the same period, which is significantly more than broader index tracking funds, according to Koyfin data. subscribers can read more here.

— Ganesh Rao

Cryptocurrencies trade higher even as Coinbase announce layoffs

Cryptocurrencies inched higher after crypto company Coinbase announced plans to trim 20% of its workforce as it looks to preserve cash during the crypto market downturn.

Bitcoin last traded higher by 1.55% at $17,459.63 according to Coin Metrics. Ether gained 1% to $1,337.85.

Other digital coins like Cronos and Cardano also advanced gains.

CEO Brian Armstrong said there was “no way” to reduce expenses and increase its chances of “doing well in every scenario” without reducing head count.

—Lee Ying Shan, Kate Rooney ‘An expensive mistake: Citi says stop hoarding cash — and reveals two areas to invest in

Investors endured a tough 2022, as stocks and bonds fell amid broader market turmoil.

While many sought refuge in the relative safety of cash, Citi says it’s now time to put it to work and named two ways to deploy it for higher returns.

Pro subscribers can read more here.

— Zavier Ong

Coinbase to layoff 20% of workforce

Coinbase’s stock gained 6% after the crypto exchange operator announced plans to slash 20% of its workforce in an attempt to trim costs.

The layoffs will impact 950 jobs and marks the second round of cuts from the company in recent months. Coinbase laid off 18% of its workforce in June in preparation for a potential recession and crypto winter, saying that it had grown “too quickly” during the bull market.

Crypto markets have come under pressure following the collapse of FTX, one of the industry’s largest operators.

Coinbase said the new round of layoffs will bring down its operating expenses by 25% for the quarter ending in March, according to a new regulatory filing.

— Kate Rooney, Samantha Subin

European markets: Here are the opening calls

European markets are heading for a higher open Thursday as investors gear up for U.S. consumer price data for December.

The U.K.’s FTSE 100 index is expected to open 21 points higher at 7,746, Germany’s DAX 37 points higher at 14,985, France’s CAC up 22 points at 6,946 and Italy’s FTSE MIB up 36 points at 25,583, according to data from IG.

Earnings are set to come from Tesco, Marks & Spencer, ASOS and Persimmon. There are no major data releases in Europe.

— Holly Ellyatt

Written by Kristel Haire