European markets closed higher on Tuesday after the U.S. inflation print for October came in cooler than expected.
The pan-European Stoxx 600 index ended up 1.4%, with almost all sectors and major bourses in positive territory. Retail stocks added 3.1% to lead gains, while oil and gas stocks dropped 0.2%.
The October consumer price index was flat month over month, while the core CPI — which excludes volatile food and energy prices — rose 0.2%. Economists surveyed by Dow Jones were expecting a 0.1% monthly rise in CPI, and 0.3% in core CPI.
Other data releases in Europe on Tuesday included euro area third-quarter GDP and U.K. labor market figures, along with Germany's ZEW survey of economic sentiment for November.
Earnings before the bell came from the likes of Vodafone, RWE and Imperial Brands.
Asia-Pacific markets rose overnight as investors looked forward to highly anticipated talks between the U.S. and China, as well as more economic data. U.S. President Joe Biden and China's President Xi Jinping's will meet in-person in San Francisco this week, for the first time in about a year.
Investors were looking to gauge the path of inflation that will inform expectations for how, or if, the Federal Reserve will adjust interest rates going forward.
Stocks open higher
Stocks opened higher on Tuesday after October consumer price index came in flat, lower than analysts expected.
The Dow Jones Industrial Average added 357 points, or 1%. The S&P 500 gained 1.3%, while the Nasdaq Composite ticked up 1.9%.
— Lisa Kailai Han
European stocks take off on U.S. inflation report
European stocks jumped on Tuesday afternoon on the back of a cooler-than-expected U.S. inflation report.
The pan-European Stoxx 600 index jumped 0.8% during mid-afternoon trade, with autos adding 1.6% to lead gains as most sectors and major bourses advanced. Oil and gas stocks dropped 0.7%.
The October consumer price index was flat month over month, while the core CPI — which excludes volatile food and energy prices — rose 0.2%.
Economists surveyed by Dow Jones were expecting a 0.1% monthly rise in CPI, and 0.3% in core CPI.
"The number was expected to be higher due in part to residual seasonality and new source data that was incorporated in the health insurance calculation. However, the important indicator on inflation in focus was owners' equivalent rent," said Lindsay Rosner, head of multi-sector investing for fixed income at Goldman Sachs Asset Management.
"Big reversion from upside miss on shelter last month to a meaningful deceleration in shelter. This should solidify the Fed on hold in December."
- Elliot Smith
Afternoon movers: DCC up 10%, Informa up 5%
Shares of DCC jumped 10% on Tuesday after the Irish sales, marketing and support-services firm reported a rise in adjusted operating profit in the first half of the year, and announced the acquisition of Germany's Progas.
British publishing, business intelligence and events group Informa gained 5.4% after lifting its full-year guidance and extending its share buyback, while French automotive parts supplier Valeo also gained 5%.
- Elliot Smith
European stock markets remain cautious
The pan-European Stoxx 600 index was flat by late morning, having given back gains of almost 0.3% earlier in the session. Telecoms stocks dropped 1% while autos gained 0.6%.
Former St. Louis Fed president says the FOMC still has ‘a ways to go’ on inflation
Former St. Louis Fed President Jim Bullard says the Federal Reserve still has "a ways to go" in fighting inflation and that there is still a risk that prices pick up once again.
- Elliot Smith
UBS sees a raft of Fed rate cuts next year on the back of a U.S. recession
The bank estimates that the upward pressure on growth from fiscal impetus in 2023 will fade next year, while household savings are "thinning out" and balance sheets look less robust.
"Furthermore, if the economy does not slow substantially, we doubt the FOMC restores price stability. 2023 outperformed because many of these risks failed to materialize. However, that does not mean they have been eliminated," UBS said in its 2024-2026 U.S. economic outlook.
"In our view, the private sector looks less insulated from the FOMC's rate hikes next year. Looking ahead, we expect substantially slower growth in 2024, a rising unemployment rate, and meaningful reductions in the federal funds rate, with the target range ending the year between 2.50% and 2.75%."
- Elliot Smith
Euro zone economy shrinks in third quarter
Euro zone GDP contracted by 0.1% quarter-on-quarter in the three months to the end of September, EU statistics agency Eurostat confirmed on Tuesday.
However, employment across the 20-member common currency bloc rose by 0.3% over the same period, contrary to the typical trend during periods of economic weakness.
- Elliot Smith
UK labor market continues to soften
Estimated job vacancies in the U.K. fell by 58,000 in the third quarter to 957,000, the Office for National Statistics said on Tuesday.
Annual regular pay growth excluding bonuses was 7.7% between July and September, down slightly from previous periods but remaining among the highest annual growth rates since records began in 2001.
Unemployment remained largely unchanged at 4.2%, while the employment rate dropped slightly to 75.7% and inactivity remained stable at 20.9%.
"The questionable veracity of the ONS figures derived from the Labour Force Survey means it's hard to confidently assess how fast the labour market is rebalancing, particularly on the labour supply side," said Jack Kennedy, senior economist at hiring platform Indeed.
But there are reasons to believe, as the Monetary Policy Committee does, that wage growth will prove fairly persistent into next year."
PwC Economist Jake Finney said the data painted a similar picture to last month and suggests that the labor market is "gradually cooling, not collapsing."
"For now, wages are growing in real terms, which should herald an end to the worst of the living standards squeeze. However, it is only a matter of time before the cooling of the labour market translates into lower wage growth," he said.
"For this reason, we are not expecting any significant real wage growth until 2025, when inflation is expected to return to target."
- Elliot Smith
Vodafone posts revenue increase as Germany returns to growth, but traders unconvinced
Vodafone on Tuesday reported a 4.7% rise in group service revenue for its fiscal second quarter, as Germany, the British telecoms company's largest market, returned to growth.
The group reiterated its full-year guidance that earnings will be roughly flat at around 13.3 billion euros ($14.3 billion) in 2023.
Vodafone shares fell 1% in morning trade, however, as analysts remain unconvinced by restructuring efforts.
"Vodafone's results are a checklist of everything bad about a company. It has swung to a loss-making position, revenue is down, the dividend is not growing and there is negative free cash flow," said Russ Mould, investment director at AJ Bell.
"We've got the usual rhetoric from the chief executive that the turnaround story is making progress but at the end of the day it's yet another set of results that remind us how Vodafone has lost its way big time. Work is underway to restructure the group but don't hold your breath for rapid change."
- Elliot Smith
Biggest movers: K+S up 5%, Sagax down 4%
Shares of K+S climbed 5.5% in early trade to lead the Stoxx 600 after the German chemical company's third-quarter results showed improving demand despite a sharp fall in year-on-year earnings due to weak potash prices.
At the bottom of the European blue chip index, Swedish commercial property company Sagax fell 4% after a discounted share sale.
- Elliot Smith
A muted open in Europe
European markets were mixed on Tuesday, with investors looking ahead to preliminary third quarter gross domestic product data from the euro zone, along with October's U.S. inflation print.
The pan-European Stoxx 600 index was roughly flat in early trade. Basic resources added 0.9% while financial services stocks dropped 0.5%.
CNBC Pro: Morgan Stanley picks global 'alpha' opportunities for November — and gives one about 60% upside
Asian markets have had a tumultuous year.
The MSCI Asia ex Japan Index plunged from its January high, losing around 12% since then.
Chinese stocks are especially volatile. Hong Kong's Hang Seng index is down around 12% in the year to date, while the Shenzhen Component has fallen over 9%.
Those keen on investing in Asia in the face of such uncertainty can consider Morgan Stanley's selection of Asian stocks it calls "alpha" opportunities for November.
CNBC Pro subscribers can read more here.
— Weizhen Tan
CNBC Pro: Goldman Sachs: These 'conviction list' global stocks will benefit from a circular economy boom
Rising commodity prices, increased regulation and a growing recognition of sustainability benefits are set to be "key catalysts" of the circular economy, Goldman Sachs said, naming its "conviction list" stocks to play the theme.
Quoting estimates from McKinsey, Accenture and the United Nations Environment Program, the bank said that the economic benefits of the circular economy range from $2.9 trillion to $4.5 trillion by 2030.
"While regulators, corporates, and investors have placed much emphasis on achieving Net Zero emissions and Biodiversity goals, we believe the critical role a Circular Economy will play in solving for both has been overlooked, particularly as a lack of available resources threatens the speed, scale, and affordability of a clean energy transition," Goldman's analysts wrote in a Nov. 2 note.
— Amala Balakrishner
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