European Stocks Reach Highest Level Since April 2022, Then Volatile on U.S. Inflation Data

The Europe Stoxx 600 index hit its highest level since April 2022 Thursday morning, but then fell sharply after the release of U.S. inflation data.
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The Stoxx 600 index traded up 0.8% during early afternoon deals, with most sectors and major bourses in positive territory.
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After initially rising upon the release of consumer price index data from the U.S., the index later trimmed its gains and was sitting at 450.18 at around 1.40 p.m. London time.
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Mining stocks were the biggest gainers, rising by more than 2%. Healthcare stocks, on the other hand, fell by 0.2%.
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After digesting the latest U.S. data, investors pushed stock futures higher in the U.S. and across the Asia-Pacific region.
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The consumer price index (CPI) report was in line with expectations, with a 0.1% dip for December and a 6.5% year-over-year increase. This is compared to a 0.1% monthly gain in November and an annual pace of 7.1%, according to Dow Jones.
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The U.S. consumer price index fell 0.1% in December, in line with the Dow Jones estimate. This is the first time the index has fallen in four months.
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This was the largest monthly decrease since April 2020.
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The headline CPI figure for the year was 6.5%, but this was the smallest figure since October 2021.
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European stocks fell, then rose sharply on the news before trimming gains. This volatility was likely due to investors trying to assess the impact of the news on the European economy.
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Thomas Moser, alternate member of the governing board of the Swiss National Bank, said that he does not yet see a need for the central bank to issue a digital currency.
Central banks around the world are exploring the use of CBDCs (central bank digital currencies). This move could have major implications for the global economy, and it will be interesting to see how things develop in the coming months and years.
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The Volkswagen Group reported its lowest sales in more than a decade in 2022, according to Reuters. The company contended with Covid-19 lockdowns in China and with supply chain challenges caused by the war in Ukraine.
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The German automaker said Thursday that it delivered 8.3 million vehicles to customers last year, a 7% decline from 2021.
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Hildegard Wortmann, a member of the extended executive sales committee, has said that weakening global economies and supply chain shortages will continue to cloud the outlook for 2023.
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Volkswagen's sales figures have put it behind Toyota Group for a third year in a row in terms of production. The Japanese carmaker had already produced 9.5 million cars by November, according to Reuters.
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European stocks surged to their highest level in over two years on Thursday morning, with all sectors in positive territory. The strong showing came as investors bet on a continued economic recovery from the pandemic.
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At 9:50 a.m. London time, the Stoxx 600 index was trading around 450.19. Travel and leisure stocks led the gains, up 1.4%.
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The automotive, banking, retail, and telecommunications sectors were all trading more than 1% higher.
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Shares of French video game publisher Ubisoft plunged more than 21% in early trade after the company cut its revenue guidance, postponed the release of its new game “Skull & Bones” and cancelled three unannounced games. The company attributed the cuts to weaker-than-expected sales of its latest game, “Assassin’s Creed Origins”.
Logitech, a Swiss company that makes computer peripherals, saw its stock drop more than 14% after it missed quarterly earnings expectations and cut its sales outlook.
Centrica, the owner of British Gas, rose more than 5% to the top of the European blue chip index after raising its full-year earnings forecast.
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Inflation in China increased 1.8% in December compared to the previous year, due to rising food prices, according to data from the National Bureau of Statistics.
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According to a report, the prices of fresh vegetables and fresh fruits rose by 7.0% and 4.7%, respectively.
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The CPI figure was as expected by Reuters, and higher than the 1.6% reading from the previous month.
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The reading was also flat with November's, improving from a 0.2% decline. This is a positive sign for the economy, as it shows that consumers are still confident and willing to spend.
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China's producer price index fell 0.7% in December from a year earlier, worse than expectations of a 0.1% decline.
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China's tech sector has been under pressure in recent years, due to a regulatory crackdown and the fallout from the country's zero-Covid policy.
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Wall Street is starting to show some love for Chinese tech stocks again, and Morgan Stanley has named its “top pick” in the sector.
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As more and more companies invest in sustainability, they are also adopting sustainable practices themselves.
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Morgan Stanley has three European stock picks that they believe will be appealing to sustainability-focused investors. These companies not only have strong ESG credentials, but also boast impressive financial performance.
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Stocks rose on Wednesday as investors bet on a positive inflation report due out on Thursday. The consumer price index is a key measure of inflation, and a strong reading could signal that the economy is heating up.
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The Nasdaq Composite index gained 1.8% over four days, its longest streak since September.
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The Dow Jones Industrial Average closed up more than 260 points, or 0.8%, on Wednesday.
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The S&P 500 rose by 1.3% today, with all 11 sectors finishing the day in positive territory. Real estate led the way, gaining 3.6%.
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European markets are set to open higher on Thursday as investors await U.S. consumer price data for December.
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According to data from IG, 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.
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There are no major data releases in Europe today, but earnings are set to come from Tesco, Marks & Spencer, ASOS and Persimmon.