European markets close higher as U.S. inflation rate cools; banks up 2.5% despite SVB jitters

Europe's Stoxx 600 index ended Tuesday's session 1.45% higher as banking stocks staged a partial recovery from Monday's sell-off and all sectors were boosted by U.S. inflation data.

Germany's DAX closed 1.83% higher, France's CAC 40 1.86% higher and the U.K.'s FTSE 100 1.17% higher.

Banks added 2.45% after plunging 5.65% yesterday.

— Jenni Reid

Stephen Isaacs, chairman of the Investment Committee at Alvine Capital, says investors need to focus on being long-term holders of risk assets and stocks, as that's "the only protection against the long-term problem of this decade, which is that inflation is going to average 4-5%."

Swedish medtech firm Sectra topped Europe's Stoxx 600 index in afternoon trade as markets remained buoyant.

Sectra was up 10.2%, a day after investment bank Carnegie raised its rating on the stock from sell to hold, Sweden's Privata Affärer reported.

Some stocks which suffered on Monday's banking sell-off made gains, including Wise and Commerzbank, up 6.7% and 3.3%, respectively.

However, London banking group Close Brothers extended its losses, falling 4.3% after it reported a fall in operating profit from £13.7 million to £7.8 million.

— Jenni Reid

The three major U.S. indexes were trading higher as the market opened Tuesday.

The Nasdaq Composite led the way, up 1.5% about 5 minutes after the opening bell. The S&P 500 advanced 1.3%, while the Dow gained 0.7%.

— Alex Harring

U.S. inflation increased 0.4% on the month in February and 6% on the year, figures published at 12:30 p.m. London time showed.

Both readings were in line with Dow Jones estimates.

U.S. annual inflation was 6.4% in January, while monthly inflation was 0.5%.

European stocks moved slightly higher following the release, extending gains from 0.53% to 0.77%. U.S. stock futures were also trading higher.

— Jenni Reid

Seb Walker, partner at Tricumen, says the challenge that Silicon Valley Bank faced was a "mismatch between their lending and their deposits, and that's just not the case with most of the European banks."

The collapse of Silicon Valley Bank had crypto investors on edge after Circle, the issuer of the stablecoin USD Coin, revealed it had $3.3 billion parked with the bank. CNBC's Arjun Kharpal runs through how USDC lost its dollar peg but ended up regaining it.

Volkswagen on Tuesday announced plans to invest 180 billion euros ($192.6 billion) between 2023 and 2027, with more than two-thirds targeting "electrification and digitalization."

The German automotive giant earlier this month posted a full-year 2022 operating profit of 22.5 billion euros, up 13% from the previous year, with battery and electric vehicle deliveries rising 26%.

Volkswagen Group CFO and COO Arno Antlitz said the strong financial position should enable the company to "continue investing in electrification and digitalization" even in a "challenging economic environment."

Read the full story here.

— Elliot Smith

European equity markets opened cautiously higher Tuesday as the aftershocks from Silicon Valley Bank's collapse continue to ripple through financial markets.

The pan-European Stoxx 600 index was up 0.2% at the start of trade, with sectors and major bourses a spread of modest gains and losses. The banking sector led losses with a 0.7% drop, following on from a tumultuous day for bank stocks Monday. Utilities and tech stocks led gains and were up 0.7%.

— Hannah Ward-Glenton

Professor of Economics at London Business School Richard Portes told CNBC that while we can't predict contagion in the banking sector, European banks are better protected than those in the U.S.

Portes' comments come as investors weigh up the fallout from the collapse of Silicon Valley Bank.

— Hannah Ward-Glenton

The number of job openings in the U.K. fell for the eighth month in a row, according to data from the Office for National Statistics.

Vacancies fell to 1.124 million between December 2022 and February 2023, a drop of 51,000.

The data also showed real pay growth (excluding bonuses) was at 6.5% among employees between November 2022 and January 2023 as wages fail to keep up with high inflation, which currently sits at 10.1%.

— Hannah Ward-Glenton

Asia-Pacific banks continued to see sharp falls in Tuesday morning trade.

Japan's Softbank's saw a decline of more than 3% in Tokyo's first hour of trade as investors continued to weigh concerns over the Japanese investment powerhouse.

Banks also saw sharp losses, with Mitsubishi Ufj Financial Group down 6.92%, SMFG falling more than 7% and Mizuho Financial lower at 7.34% and Nomura falling 4.6%.

Australian banks also saw steep declines. Macquarie Group fell 3.6%, National Australia Bank dropped 2.94%, Westpac Banking Corp fell 2.12% and Commonwealth Bank of Australia was down 1.73%.

South Korea's Shinhan Financial Group fell 1.53%, Woori Financial Group was lower at 2.4%, KB Financial Group fell 2.98% and Industrial Bank of Korea dropped 1.9%.

— Jihye Lee

The U.S. consumer price index for February is expected to come in at 0.4% on a monthly basis or at a 6% annual pace, according to Dow Jones estimates.

This is just slightly lower than January's inflation data of 0.5% and 6% respectively.

CPI will be the next data point that could provide insight on the Federal Reserve's move ahead of its meeting on March 21 and 22.

A hot inflation report will raise expectations the Fed could hike rates by 50 basis points, up from the 25 points it implemented in February.

—Lim Hui Jie, Patti Dorm

Many firms will find a higher-interest-rate environment very difficult to operate in, as demonstrated by the Silicon Valley Bank crisis, said Anthony Doyle, head of investment strategy at Firetrail Investments.

"There will be winners and there will be losers and part of the challenge for investors today is identifying which are those companies that will find this environment much more difficult than they have done in a zero interest rate world," he said.

Still, he identified three stocks that he thinks look resilient in this new market environment.

CNBC Pro subscribers can read more here.

— Weizhen Tan

The collapse of Silicon Valley Bank has added to the woes of the tech sector, coming hot on the heels of expectations that interest rates are likely to remain high for some time.

But some strategists are doubling down on the sector.

"We think that for medium- and long-term investors, the recent bout of volatility that you've seen represents a buying opportunity," Anthony Doyle, head of investment strategy at Firetrail Investments, told CNBC on Monday.

Pro subscribers can read more here.

— Zavier Ong

Startups will soon feel the secondary effects of Silicon Valley Bank's collapse in a "very important way," said Matt Higgins, CEO and co-founder of private investment firm RSE Ventures.

Speaking to CNBC's "Street Signs Asia," Higgins explained that SVB was "very paternalistic" to the sector, providing not only payroll services and loans to founders, but more importantly, lines of credit as well.

"A lot of these companies were having trouble already raising equity. And they were counting on those lines to extend their runway to push out [their] cash burn beyond the recession we all expect," Higgins said.

However, with the shuttering of SVB, "that evaporated overnight, and there's not another lender that's going to be stepping in to fill those shoes." he says.

— Lim Hui Jie

European markets are expected to open higher Thursday.

The U.K.'s FTSE 100 index is expected to open 32 points higher at 8,365, Germany's DAX up 25 points at 18,510, France's CAC 7 points higher at 8,143 and Italy's FTSE MIB up 59 points at 33,908, according to data from IG.

Earnings are due from Ferrovial, Telefonica, EDP, Enel, Pirelli and Salvatore Ferragamo.

— Holly Ellyatt