European equities are kick starting the day on a more positive note, with major indices posting modest gains at the open. Here’s a snapshot of how things are playing out to start the day:
- Eurostoxx +0.6%
- Germany DAX +0.4%
- France CAC 40 +0.5%
- UK FTSE +0.2%
- Spain IBEX +0.5%
- Italy FTSE MIB +0.3%
It’s a decent start with the gains being fairly broad-based across the region. That carries over the steadier showing from yesterday as investors continue to take a bit of a breather after having dealt with surging bond yields and growing fiscal risks in France over the past few weeks.
Having said that, I wouldn’t read too much into the early gains just yet. There’s a much bigger event on the calendar today, and that’s the US CPI report for September.
With Treasury yields having surged to multi-decade highs in recent weeks, inflation remains a major talking point for investors. The main concern is that another hot inflation reading could reinforce expectations that the Fed will have to keep interest rates “higher for longer”, or perhaps even deliver another rate hike by year-end.
The key focus to the report later will be on core inflation, especially with higher energy prices expected to push up the headline reading.
For European stocks, the question is now whether the positive open can hold once we get to the reaction in Treasury yields and broader risk sentiment to the inflation figures.
At least for now, the calmer mood is one that is prevailing. And that is also mirrored by the mood in US futures, with S&P 500 futures up 0.1% as we get into the session. However, the real test for equities today will come when the US inflation numbers hit the wires later.
This article was written by Justin Low at investinglive.com.