European markets close higher as travel stocks get a boost; German inflation lower than expected

The approach to Covid needs to be recalibrated to reduce risks, an analyst told CNBC.

Peter Drobac, director of the Skoll Centre for Social Entrepreneurship at the University of Oxford, talks to "Squawk Box Europe" about how we should deal with Covid as we enter 2023.

Hellofresh topped the pan-European Stoxx index mid-afternoon with gains of 8.7% after Goldman Sachs reiterated its "buy" rating of the stock.

Takeaway services Just Eat and Delivery Hero were also among the companies at the top of the index, making gains of 6.4% and 5.5%, respectively.

The food and beverages sector was up 1% overall by mid-afternoon.

— Hannah Ward-Glenton

German consumer prices rose by 9.6% year-on-year in December, according to data from the Federal Statistics Office Tuesday. Analysts had anticipated a 10.7% rise.

The figures are for harmonized consumer price inflation, which the European Central Bank uses to compare prices across the euro area.

Prices decreased by 1.2% compared to November.

Investors will be assessing the extent of ongoing cost pressures in Europe's largest economy, and how the data could impact the ECB's rate-hiking plans.

Germany's DAX index remained mostly unchanged following the announcement, as did the pan-European Stoxx 600 index.

In December, Bundesbank president Joachim Nagel said he expected inflation to be lower in December following the introduction of price caps on gas and electricity.

— Hannah Ward-Glenton

David Roche, president at Independent Strategy, says "we narrowly escaped recession."

The strategist said we're not near a bull market, speaking on "Squawk Box Europe" Tuesday.

The price of gold notched a six-month high early on Tuesday, and analysts believe the rally has further to go in 2023.

Spot gold peaked just below $1,850 per troy ounce in the early hours, before easing off to trade around $1,833 per ounce by late-morning in Europe.

Gold prices have been on a general incline since the beginning of November as market turbulence, rising recession expectations, and more gold purchases from central banks underpinned demand.

Several analysts are projecting record highs for the precious metal in 2023.

- Elliot Smith

German inflation is expected to have slowed to 10.7% year on year in December from November's 11.3%, according to economists polled by Reuters.

The figures are for harmonized consumer price inflation, which the European Central Bank uses to compare prices across the euro area.

Germany's preliminary HICP reading for December is due at 1 p.m. London time. Investors will be assessing the extent of ongoing cost pressures in Europe's biggest economy, and what it could mean for the ECB's rate hiking plans.

In data published Tuesday morning, inflation in five key German states came in lower for a second consecutive month in December, suggesting national figures would follow suit.

That included the economic driver of North Rhine Westphalia, where CPI was 8.7% year on year, down from 10.4% in November. 

Last month, Bundesbank president Joachim Nagel said he expected inflation to be lower in December in light of price caps introduced on gas and electricity.

On Friday, Spain's harmonized inflation rate fell more than expected, from 6.7% to 5.8%.

This week will also see inflation readings from France on Wednesday and Italy on Thursday, ending with a euro zone flash estimate on Friday.

— Jenni Reid

There were few places to hide amid the broad sell-off in 2022 — but investors are now looking at a fresh slate. CNBC's Steve Sedgwick and Geoff Cutmore assess the damage done and what's to come.

Package holiday company Tui topped the Stoxx 600 in early trade, rising around 5%. The first week of the year generally sees a spike in bookings.

The travel sector was the stand-out performer in the index, up 2.4% amid an overall rise of 1.1%.

Engine-maker Rolls-Royce was also buoyed, overtaking Tui by the end of the first hour of trade with a 6.1% gain.

At the bottom of the index, French naval engineering firm Gaztransport et Technigaz fell 4.5% after announcing the end of its operations in Russia.

— Jenni Reid

Some of the biggest questions for market performance in 2023 may find answers in the first quarter of the year.

Heading into the new year, there's an unusually high level of consensus among Wall Street strategists in their stock market outlooks. The common view is that the stock market will perform poorly in the first quarter and probably the second, carving out a new low before improving into the end of the year.

For more on the year ahead, read the full story on CNBC Pro.

— Patti Domm, Tanaya Macheel

Britain's FTSE 100 is set to start the year around 13 points higher at 7,465, Germany's DAX is set to shed around 57 points to 14,012 and France's CAC 40 is seen around 37 points lower at 6,558.

The price of Brent oil will fall to the lower end of $70 a barrel by year's end, according to Citi's global head of commodities research, Ed Morse, adding volatility surrounding the oil markets will remain.

"We're expecting volatility to be about what it was last year," said Morse. "We're looking at Brent prices going down by the end of the year to the low 70s," he estimated.

A number of oil producing countries are facing extreme difficulties, Morse said. He also expects demand for oil to be kept low due to a prolonged recession in China.

Developments on Russia's war on Ukraine will also add onto volatility in prices, Morse added.

Brent crude dipped 0.43% to $85.57 a barrel. The U.S. West Texas Intermediate crude traded down 0.39% to $79.95. 

—Lee Ying Shan

The once-hot chip sector suffered in 2022, but Wall Street looks to be turning more optimistic on semiconductor stocks for the year ahead.

Recently, several pros have urged investors to take a longer-term view on the sector, given the importance of chips in several key secular trends.

Analysts named one stock in particular they're bullish on, citing its earnings potential and future profitability.

CNBC Pro subscribers can read more here.

— Weizhen Tan