Europe stocks close lower as U.S. inflation data beats expectations; autos erase gains

This is CNBC's live blog covering European markets.

European stock markets closed slightly lower Wednesday as investors reacted to stronger than expected U.S. inflation data.

The Stoxx 600 index ended down by 0.3%, with sectors and major bourses in negative territory. Retail stocks dropped 0.9% to lead losses.

European markets

It comes shortly after U.S. inflation data for August exceeded expectations. The consumer price index, which measures costs across a broad variety of goods and services, rose 3.7% from a year ago, the U.S. Department of Labor reported Wednesday. Economists surveyed by Dow Jones had forecast an increase of 3.6%. On a monthly basis, prices increased 0.6%, in line with expectations.

Core CPI, which strips out food and energy and is closely monitored by the Federal Reserve, rose by 0.3% on the month and 4.3% on the year. Economists polled by Dow Jones signaled rises of 0.2% and 4.3%, respectively.

Autos briefly rallied in morning trade after European Commission President Ursula von der Leyen said the EU would launch an investigation into subsidies given to electric vehicle makers in China.

The sector rose as much as 2% after the announcement before falling to a slight loss. Von der Leyen said Europe was "open to competition but not for a race to the bottom."

Zara owner Inditex, the world's biggest fast fashion retailer, dipped 3% despite reporting interim half-year results that beat expectations and showed a 14% rise in gross profit. Analyst reactions suggested higher operating expenses and concerns over future performance may have spooked some investors, as others took profits.

On the data front, official figures showed the U.K. economy contracted by 0.5% in July. Economists in a Reuters poll had signalled a 0.2% fall.

U.S. stocks ticked higher on Wednesday, while Asia-Pacific markets fell across the board as investors assessed key economic data out of Japan and South Korea.

Europe stocks close slightly lower

European stock markets closed slightly lower on Wednesday as investors reacted to hotter than expected U.S. inflation data.

The pan-European Stoxx 600 ended the session down 0.3%, with sectors and major bourses pointing in opposite directions.

— Sam Meredith

US core inflation comes in hotter than expected

U.S. inflation posted its biggest monthly increase of the year in August, figures showed Wednesday, as the core consumer price index came in slightly hotter than expected.

Core CPI, which strips out food and energy and is closely monitored by the Federal Reserve, rose by 0.3% on the month and 4.3% on the year. Economists polled by Dow Jones signaled rises of 0.2% and 4.3%, respectively.

Headline CPI was up by 0.6% month-on-month, and up 3.7% from a year ago, versus estimates of 0.6% and 3.6%.

"Today's uptick in CPI could slightly increase the likelihood of a November interest rate hike and potentially delay the timing of any rate cuts until deeper into 2024," said Joe Tuckey, head of FX analysis at Argentex Group. "If the dollar cannot make further gains from this data, this may mark an interim top to the recent dollar rally."

Markets expect the Fed to skip a rate hike this month, but put around a 40% probability on a hike in November, according to CME Group data.

— Jenni Reid

European dealmaking remains cautious but private equity retains optimism, report says

Inflation, higher interest rates and economic uncertainty continue to weigh on European mergers and acquisitions sentiment, with dealmakers more hesitant about their prospects than a year ago, according to a new report from law firm CMS and Mergermarket.

It found a growing divergence between private equity and corporations, with the former more optimistic than the latter.

It also found smaller deals were more prevalent in the first half of the year when compared with the same period of 2022 and 2021. The total value of deals fell by 47% to 316 billion euros ($339.4 billion), while the volume of deals dropped only 12%, to 7,608.

In the survey of 240 corporates and 90 private equity firms based in Europe, the Americas and the Asia-Pacific regarding the European M&A outlook, 43% expected activity to fall within the next 12 months and 35% expected a rise.

— Jenni Reid

BP CEO’s resignation: Investors dislike uncertainty, analyst says

BP CEO's resignation: Investors dislike uncertainty, analyst says
BP CEO's resignation: Investors dislike uncertainty, analyst says

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, says there is a great deal of uncertainty about who's going to take the top job on a full-time basis, and the market has been "incredibly supportive" of BP CEO Bernard Looney's strategies.

Stocks on the move: Aviva, Redrow, BP

Shares of British insurer Aviva were 2.5% higher at 11:17 a.m. London after it said it would sell its 25.9% stake in Singapore Life Holdings and two debt instruments for £800 million ($997 million).

British homebuilder Redrow climbed 4.7% as it beat a pre-tax profit estimate, even as the FTSE 250 firm said it expected the figure to fall by a half in the next financial year.

U.K. builders were broadly higher, with Persimmon up by 2.8% and Taylor Wimpey up 2%, despite recent data showing house prices falling at their fastest rate since 2009 and mortgages in arrears spiking.

Meanwhile, the business world digested the shock departure of BP CEO Bernard Looney.

Looney told the company that he had not been "fully transparent in his previous disclosures" about relationships with colleagues prior to becoming CEO.

Market reaction was muted, with BP shares 0.8% lower.

— Jenni Reid

Not surprising if U.S. core inflation doesn’t fall to 2% in a year: Goldman Sachs Asset Management

Not surprising if U.S. core inflation doesn't fall to 2% in a year: Goldman Sachs Asset Management
Goldman Sachs Asset Management discusses U.S. core inflation

Valentijn van Nieuwenhuijzen, global co-head of multi-asset solutions at Goldman Sachs Asset Management, says that's given the state of the labor market and wage trends.

Stocks on the move: Autos climb 1.4%

Autos stocks rose 2% in early trade before trimming gains to 1.2% despite broader negativity in markets.

The European Commission, the executive arm of the European Union, on Wednesday launched an investigation into subsidies given to electric vehicle makers in China.

Volvo and Renault topped the Stoxx 600, gaining 4.6% and 4.4%, respectively, while Volkswagen shares climbed 2.5%.

— Jenni Reid

UK economy contracted more than expected in July

U.K. gross domestic profit fell by 0.5% in July, below the 0.2% contraction forecast in a Reuters poll of economists.

Services output was the main drag, the Office for National Statistics said, declining 0.5%.

The economy put in a better-than-expected performance for the second quarter as a whole, with the ONS reiterating its reading of 0.2% growth.

It is the latest sign of economic strain amid higher interest rates. On Tuesday, figures showed U.K. mortgages in arrears jumped to a seven-year high in the three months to June.

Paul Dales, chief U.K. economist at Capital Economics, said the GDP figures may indicate a mild recession has begun and "underlying growth has lost momentum since earlier in the year."

Dales highlighted strikes and unusually wet weather as drags on certain sectors, but said output declined more broadly, suggesting widespread weakness.

"Even so, with wage growth still uncomfortably strong, we suspect the Bank of England will still raise interest rates one final time next week, from 5.25% to 5.50%," Dales said.

— Jenni Reid

Oil prices push higher after hitting 10-month high

Oil prices climbed Wednesday morning after hitting their highest level since November 2022 on supply concerns.

ICE Brent Crude futures with November 2023 expiry were 0.22% higher at $92.26 a barrel at 7 a.m. London time. WTI Crude futures were 0.3% higher at $89.11.

Both benchmarks rose nearly 2% on Tuesday.

Export terminals have been closed in Libya amid devastating storms that have killed more than 1,000 people.

Meanwhile, OPEC released its monthly market report, reiterating its forecast for demand for the rest of the year.

A separate report from the U.S. Energy Information Administration said it expected global oil inventories to decline in the fourth quarter, and for Brent crude to average $93 per barrel for the period. It also raised its 2023 oil demand growth forecast.

Brent Crude last week rose above $90 a barrel for the first time this year after Saudi Arabia extended voluntary output cuts.

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Brent Crude futures, November '23.

— Jenni Reid

CNBC Pro: Alibaba and more: CLSA names 3 of the ‘cheapest AI plays’ worldwide — giving two over 50% upside

Analysts at capital markets and investment group CLSA picked three global stocks they expect will benefit from the "lucrative potential" of artificial intelligence.

"We estimate the global AI market could reach $1 trillion by 2026, with generative AI, the next big driver of productivity and innovation, making up $100 billion," the analysts said in a note.

CNBC Pro subscribers can read more here.

— Amala Balakrishner

Apple stock falls as company unveils iPhone 15

Apple stock slipped 1.8% Tuesday after the company unveiled the iPhone 15 at its "Wonderlust" launch event in Cupertino.

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Apple stock.

The latest handset in the popular iPhone line of smartphones boasts a 48 megapixel main camera, the A16 Bionic chip and 4K cinematic mode. The iPhone 15 is also made with 75% recycled aluminum and 100% recycled copper. The iPhone 15 will start at $799 for the base model, $999 for the Pro and $1199 for the Pro Max.

— Brian Evans

CNBC Pro: Morgan Stanley names its top stock picks — and its 'least favored' — in a corner of the chip market

A "recovery narrative" has been playing out in a corner of the semiconductor market this year, according to Morgan Stanley.

Pricing and inventory conditions are improving further for this segment, the bank said.

It names its top picks and least favored stocks.

CNBC Pro subscribers can read more here.

— Weizhen Tan

October WTI crude oil futures reach highest since last November

October West Texas Intermediate crude oil futures climbed as high as $88.45 a barrel (42 gallons) early Tuesday, the highest since Nov. 15, 2022.

WTI hasn't closed above above $90 a barrel since last Nov. 11.

November Brent futures — the global benchmark — also hit a 10-month high Tuesday, reaching $91.50 a barrel.

Permian Resources, Range Resources, EQT, Denbury and other energy plays are all up 1% or more in early trading.

— Scott Schnipper, Gina Francolla

CNBC Pro: A $16 billion lawsuit payout is going to send this stock soaring, analysts say

Shares of U.S. and UK dual-listed stock jumped 20% last week after a U.S. judge ruled in favor of the company.

The share of a $16 billion payout from the lawsuit is expected to take the stock soaring, according to Jefferies and Numis.

CNBC Pro subscribers can read more here.

— Ganesh Rao

European markets: Here are the opening calls

European markets are heading for a positive open Thursday.

The U.K.'s FTSE 100 index is expected to open 3 points higher at 7,425, Germany's DAX up 29 points at 16,194, France's CAC up 6 points at 7,277 and Italy's FTSE MIB up 18 points at 29,730, according to data from IG. 

Regional investors will be keeping a close eye on the release of preliminary euro zone inflation data for November on Thursday. Final third-quarter gross domestic product data for France is also due, as are German unemployment figures for November.

— Holly Ellyatt