USA AND EUROPE EQUITY HOVERING AROUND ALL TIME HIGH
US stocks were around the flatline on Wednesday as traders weigh upbeat earnings reports, fresh economic data and persistent inflation concerns. Housing starts unexpectedly edged down last month, a sign that high costs for building materials continue to hurt the sector. On the other hand, building permits were up and retail sales and industrial production released yesterday pointed to a robust economic recovery. Meanwhile, Lowe’s, Target and TJX beat earnings forecast after both Walmart and Home Depot topped estimates the day before. Cisco Systems and Nvidia are also due to report after the market closes.
European stock markets tread waters on Wednesday, hovering all-time highs, as traders gauged on a batch of inflation data for an update on existing price pressures and to look for clues on the next moves by central banks. The headline inflation rate in the UK rose to a 10-year high, raising the odds the central bank will hike rates next month, while the October annual inflation rate for the Eurozone was revised higher to a 13-year high of 4.1%, as expected. On the pandemic front, Ireland will join Austria and the Netherlands and reimpose COVID-19 restrictions, as the Irish government urged people to work from home and forced bars and restaurants to close by midnight. New restrictions are also expected to be announced in Spain, Italy, and Germany in the coming days.
The FTSE 100 edged lower on Wednesday, lagging behind its flat European peers, amid a stronger pound and as investors digest fresh inflation figures. The annual inflation rate in the UK accelerated to the highest since December 2011 due to a jump in energy bills, raising the odds the BoE will raise the interest rate next month, especially after a strong labour market report released yesterday. On the earnings front, UK software maker Sage saw FY2021 revenues decline by 3% to £1,846 million and operating profits fall 8% to £373 million, ending up with overall EPS of 26.33 pence, 7% lower from last year. Meanwhile, UK property developer British Land posted dividends of 10.32 pence per share in its half-year income statement, up from 8.40 pence in the previous year.
The CAC 40 Index was 0.1% higher to hover around all-time highs of 7,160 on Wednesday, as investors displayed caution ahead of American housing starts data coming later today, while keeping lingering inflation in mind. Vinci (1.3%) led the risers after the group announced that traffic in its airport subsidiary had increased 116% yearly in October, even though the flux is 48.3% lower than that of 2019. Further, Vivendi rose 1.2% following news that Italian prosecutors asked a judge to drop the case against Vivendi’s CEO for alleged market manipulation in his stake building of Italy’s Mediaset. Meanwhile, Hermes extended gains by 1% to reach a fresh record, while other luxury goods stocks are mixed.
The FTSE MIB edged 0.1% higher to hover around 13-year highs at the 27,840 level, as gains in tech shares offset losses in healthcare and raw materials stocks. On the corporate front, Prysmian (1.7%), and Campari (1.3%) booked gains, while Banca Generali (-1%) extended last session’s losses. Meanwhile, Innovatec jumped 3% following the news that its subsidiary, Innovatec Power, signed a partnership with Unicredit (0.7%) for managing incoming tax credits derived from the utilities supplier’s sustainable real estate energy redevelopment.
