European markets closed lower on Wednesday as investors reacted to the latest inflation data out of the U.S.
The pan-European Stoxx 600 provisionally ended down 0.8%, with almost all sectors and all major bourses sliding into negative territory. Mining stocks led the losses, down 2.3%, while oil and gas stocks bucked the downward trend, up 0.8%.
U.S. stocks posted their worst day in two years on Tuesday after a key August inflation report came in hotter than expected, hurting investor optimism for cooling prices and a less aggressive Federal Reserve.
U.S. consumer price index (CPI) inflation rose by 0.1% for the month and 8.3% annually in August, the Bureau of Labor Statistics reported Tuesday, defying economist expectations that headline inflation would fall 0.1% month on month.
Core CPI, which excludes volatile food and energy costs, climbed 0.6% from July and 6.3% from August 2021.
The reading fueled further speculation that the U.S. Federal Reserve will continue its aggressive policy of tightening monetary policy.
The inflation report was one of the last pieces of data on inflation the Fed will see ahead of its September meeting, where the central bank is expected to deliver its third consecutive 0.75 percentage point rate hike in an effort to combat high inflation.
Ocado slides 7% on sales miss
Ocado shares slid more than 7% Wednesday following news that it expects to see grocery sales fall for the first time in the company's history.
The British retailer said Tuesday that it is forecasting "a small decline" in sales for the year to November and "close to break-even" underlying profitability.
— Karen Gilchrist
Stocks open slightly higher
Stocks rose modestly at 9:30 a.m., with the Dow gaining less than 100 points. However, the major averages drifted back toward the flatline in the opening minutes of trading.
— Jesse Pound
Stocks on the move: KION Group down 25%, Uniper down 13%
KION Group shares plunged more than 25% by mid-afternoon after the German warehouse equipment manufacturer issued a profit warning, announcing that it expects to report a third-quarter loss due to supply chain shortages and rising energy and material costs.
Uniper shares tumbled more than 13% after reports that the German government is considering nationalizing the utility giant and major Russian gas importer as the country's energy crisis deepens.
- Elliot Smith
British pound rises against the dollar after fall in UK inflation
Sterling climbed against the U.S. dollar on Wednesday as the greenback broadly retreated and the pound received a boost from an unexpected slowdown of U.K. inflation.
As of late morning in Europe, the pound was up almost 0.6%, trading at around $1.5556, while the euro and Japanese yen also gained ground against the dollar.
- Elliot Smith
EU chief von der Leyen promises overhaul of energy markets, tax on fossil fuel profits
The European Union will launch a "deep and comprehensive reform" of the electricity market, European Commission President Ursula von der Leyen said Wednesday.
In her annual State of the Union speech, delivered at the European Parliament building in the French city of Strasbourg, von der Leyen said the market was designed on the principle of merit order, and not fit for purpose.
"Consumers should reap the benefits of low-cost renewables," she said, "So we have to decouple the dominance of the price of gas on the price of electricity."
- Jenni Reid
Stocks on the move: KION Group down 19%, Inditex up 5%
KION Group shares plunged more than 19% in early trade after the German warehouse equipment manufacturer issued a profit warning, announcing that it expects to report a third-quarter loss due to supply chain shortages and rising energy and material costs.
Shares of Spanish clothing company Inditex climbed more than 5% to lead the Stoxx 600 after it reported a jump in first-half sales and profit and beat market expectations.
- Elliot Smith
UK inflation rate unexpectedly dips to 9.9% as fuel prices decline
U.K. inflation slowed in August on the back of a fall in fuel prices, though food prices continued to rise as the country's cost-of-living crisis persists.
The consumer price index rose 9.9% annually, according to estimates published Wednesday by the Office for National Statistics, fractionally below a consensus forecast of 10.2% among economists polled by Reuters. It was also down from July's figure of 10.1%.
"A fall in the price of motor fuels made the largest downward contribution to the change in both the CPIH and CPI annual inflation rates between July and August 2022," the ONS said in its report.
"Rising food prices made the largest, partially offsetting, upward contribution to the change in the rates."
- Elliot Smith
CNBC Pro: Morgan Stanley says an investment 'boom' is coming to India, and names the stocks to play it
India is about to see a surge in investments, according to Morgan Stanley, whose analysts wrote a note entitled "How to Play India's Coming Capex Boom."
CNBC Pro spotlights 3 stocks that the bank thinks are set to benefit as a result of the spending spree.
Pro subscribers can read more here.
— Zavier Ong
CPI report shows inflation broadening throughout the economy
August's surprisingly hot consumer price index showed that inflation is not just a gasoline issue.
Inflation was broad last month, with shelter costs rising 0.7% for the month. New vehicle prices and medical care services increased 0.8% each.
And even as gas prices have declined, food prices continue to rise. The food at home index, a proxy for grocery prices, is up 13.5% over the past year.
"The core inflation numbers were hot across the board. The breadth of the strong price increases, from new vehicles to medical care services to rent growth, everything was up strongly," said Mark Zandi, chief economist at Moody's Analytics. "That was the most disconcerting aspect of the report."
— Jeff Cox, Jesse Pound
Wall Street on track for worst day of 2022
The three major averages are now on track for their worst day of 2022 as the market rout has deepened in the final hour. The Nasdaq Composite dropped more than 5%, the S&P 500 fell more than 4%, and the Dow has shed more than 1,200 points.
— Jesse Pound
CNBC Pro: Morningstar says this is 'one of the best' value-focused funds
For investors, it has been a toss-up between value and growth stocks for much of this year.
As the focus swings back to value, independent mutual fund rating company described one value-focused fund as "one of the best large-value funds available."
— Weizhen Tan
European markets: Here are the opening calls
European markets are heading for a higher open Wednesday.
The U.K.'s FTSE 100 index is expected to open 20 points higher at 7,509, Germany's DAX up 60 points at 16,509, France's CAC up 28 points at 7,409 and Italy's FTSE MIB up 85 points at 30,192, according to data from IG.
Euro zone retail sales data for October is due, and TUI is set to release earnings.
— Holly Ellyatt