Europe close: Stocks firm a little bit more on global inflation, Covid-19 news
By Alexander Bueso
Date: Wednesday 11 May 2022
(Sharecast News) - European shares firmed a bit on Wednesday, despite record inflation data in Germany and slightly worse than expected US CPI figures that drew a mixed reaction from economists.
Even so, the pan-European Stoxx index added 1.74%, building on early gains following a reported halving in new cases of Covid-19 in Beijing that fed hopes mobility restrictions might soon be partially eased.
In the background, crude oil futures were about 5% higher, the euro was up a touch and yields on benchmark Bunds dipped.
The annual rate of headline US inflation slowed from the 8.5% clip observed in March to 8.3% for April (consensus: 8.1%).
Perhaps most importantly, most economists appeared to be forecasting a noticeable further slowdown in US inflation over the remainder of 2022.
Investors have been spooked in recent weeks by suggestions that central banks will have to me more aggressive with rate hikes in order to stymie rampant inflation.
On that note, German inflation hit a new record high in April as food and energy prices rose, according to figures released on Wednesday by Destatis.
Annual inflation edged up to 7.4% from 7.3% in March, with higher food prices contributing the most to the increase.
In March, the biggest contributor had been energy prices. "What stands out in April 2022 is the above-average increases in food prices," Destatis said. "This is where the impact of the war in Ukraine is becoming more and more visible."
In equity news, shares in HomeServe shot higher on after a report that Canadian investment firm Brookfield Asset Management is nearing a takeover of the household repairs provider.
Shares in Swedish Match jumped 9.0% after Marlboro-maker Philip Morris International said it was making a recommended cash offer for the company of about 161.2 billion Swedish crowns ($16bn).
Shares in catering group Compass were also 7% higher as the company posted a jump in first-half operating profit and revenue, lifted its revenue guidance and announced the launch of a £500m share buyback as it hailed strong growth across all sectors.
French train maker Alstom dropped after it reported better-than-expected annual operating profit.
Bayer fell after the Biden administration asked the US Supreme Court not to hear the German agriculture and pharmaceutical company's bid to dismiss claims by customers who contend that its Roundup weedkiller causes cancer.
Shares in German drug discovery and development company Evotec slumped 11% after the company posted lower adjusted first quarter core earnings.
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