US stock futures were little changed on Thursday after a broad sell-off in regular session, as hot inflation data pulled forward rate hike expectations, pushing bond yields higher and denting high valuation growth stocks. Fresh CPI figures showed inflation jumped more than expected to 6.2% in October, marking the highest reading since 1990 and raising concerns that price pressures may weigh on the economy far longer than expected. Expectations of earlier tightening were revived, with Fed funds futures pricing in greater odds of a July 2022 first full central bank rate hike. As a group, energy firms lost 2.68%, technology companies fell 2.37% and communication services-related stocks shed 1.36%. In after-hours trading, Disney, Beyond Meat and Bumble shares tanked on disappointing quarterly earnings, while Affirm Holdings, Honest Company and Sofi jumped on better-than-expected revenues.
European stock markets tread waters on Thursday, hovering around all-time highs as traders weighed upbeat earnings and mounting doubts over the argument that rising inflation rates are temporary, following a 3-decade high inflation reading in the US. Also, ECB Governing Council member Robert Holzmann said on Wednesday that the central bank’s asset purchase program could end in September 2022 if inflation sustainably returns to the official target.
The FTSE 100 edged higher towards new 21-month highs on Thursday, against a mostly flat Europe, as investors weighed a slew of economic data and a new batch of earnings, while mounting concerns about rising prices filled the background. Luxury stock Burberry posted a 38% surge in revenues during the 1H22 period, managing to widen its operating profit margin by 7.1 percentage points to 17.1% and diluted EPS more than doubled to 35.7 pence per share. On the data front, the UK economy expanded 1.3% QoQ in the third quarter, slowing from a 5.5% hike in the prior period and missing market forecasts of 1.5%, amid a contraction in the manufacturing sector. Meanwhile, industrial output unexpectedly dropped in September, snapping a two-month period of expansion, weighed down by significant contractions in the electricity & gas sector and the oil & gas extraction sector.
The CAC 40 Index edged up 0.2% to trade around 7,060 on Thursday, as the release of key corporate earnings pushed the index upwards, despite underwhelming growth data from the UK and higher-than-expected inflation data from the US. ArcelorMittal advanced 2.7% from posting a 52% higher Q3 turnover of USD 20.2 billion and a net profit of USD 4.6 billion, the highest since 2008. The steel group also announced that their share buyback program shall be increased by USD 1 billion. At the same time, Engie rose 2.3% due to strong Q3 results, as the firm further raised their annual targets due to a more favorable market environment.
The FTSE MIB extended previous session’s gains by 0.1% to trade around 27,600 on Thursday, supported by investors’ optimism in a session loaded with corporate earnings releases. Generali (1.2%) led the gains after beating market expectations with its Q3 results, in addition to announcing that it has EUR 1 billion left to deploy in potential M&A opportunities. On the other hand, Interpump group (-4.6%) led the losses after Equita labeled the water pump specialists as “hold” following their results last session. Also, A2a (-0.7%), Illimity Bank (-1.3%) and Poste Italiane (-1.5%) dropped after posting Q3 results.