European markets head for higher open, looking to build on gains

Holly Ellyatt

European markets are heading for a higher open on Wednesday, looking to build on gains in the previous session.

The region’s markets ended Tuesday higher, with the Stoxx 600 index rising 0.44% and all major bourses making gains.

The only sectors weighing down markets were basic resources, which fell 1.48%, and oil and gas, which fell 1.26%. Tuesday afternoon saw the European Commission propose setting temporary limits on daily gas trading levels to avoid price spikes.

Stocks on the move: ASML up 5%, Sartorius down 14%

Shares of chip firm ASML are up 5.3% following positive third-quarter earnings. Sales were better than expected and the company said it did not expect to be majorly affected by U.S. sanctions on China.

Sartorius Stedim shares have fallen 13.6% following the biotech company’s nine-month results for 2022. A prompt normalization in demand after the height of the pandemic delivered double-digit sales revenue.

— Hannah Ward-Glenton

European markets: Here are the opening calls

European markets are heading for a higher open on Wednesday, looking to build on gains in the previous session.

The U.K.’s FTSE index is expected to open 17 points higher at 6,960, the German DAX up 29 points at 12,824 and the French CAC up 12 points at 6,090, according to data from IG.

— Hannah Ward-Glenton

UK inflation rises to 10.1% as food prices soar

The consumer price index rose 10.1% in September, according to the Office for National Statistics.

Reuters had forecast an increase of 10%.

Increased food, energy and transport prices drove the inflation hike.

— Hannah Ward-Glenton

Shares of Apple suppliers fall on report of iPhone 14 Plus production cut

Shares of Apple suppliers in Asia slipped after the tech firm reportedly asked a manufacturer in China to halt the production of an iPhone 14 Plus component as Apple re-evaluates demand for the product.

The Information reported that two other suppliers that assemble modules from that component have also cut production dramatically.

LG Innotek and SK Hynix in South Korea lost around 2%, while Japan’s TDK Corporation and Murata Manufacturing shed more than 1% each.

Apple’s stock briefly lost $4 per share overnight, but closed the regular session 0.94% higher as major indexes gained.

— Abigail Ng

CNBC Pro: Goldman Sachs outlines four economic scenarios and predicts how gold will perform in each

It’s been a choppy year for gold, with the precious metal “torn between growth and inflation risks and higher real rates and the strong dollar,” Goldman analysts wrote in an Oct. 11 note.

“In our view, there remains a lot of uncertainty around the future path of U.S. inflation, growth, rates and the central bank (CB)’s reaction functions.”

Goldman ran four different economic scenarios, and predicted where gold prices could end up in each case.

Spot gold prices year-to-date Chart

— Weizhen Tan

U.S. crude futures move up $1 per barrel on expectations that Biden will release oil from Strategic Petroleum Reserve

Futures of West Texas Intermediate crude moved up around $1, or 1.33% and futures of Brent crude

rose $0.83, or 0.92% as the Biden administration is expected to release more oil from the U.S. Strategic Petroleum Reserve.

The plan could be announced as early as Wednesday, sources told CNBC.

The move aims to extend the current SPR delivery program, which began this spring, through December, the sources said.

–Kayla Tausche, Jihye Lee

How much higher can the Fed drive the 10-year yield?

The Fed is widely expected to hike by another three-quarters of a percentage point next month, but the central bank may be reaching its limit for dictating long-term interest rates, according to The Leuthold Group’s Jim Paulsen.

“There is considerable precedent in past tightening cycles for the Fed to be shut down by the bond market “blinking” first. The Fed may soon attempt to raise the funds rate to 4%, 4.5%, or even 5%. But at some point, longer-term bonds may simply stop rising and refuse to follow the Fed’s lead,” Paulsen wrote in a note to clients on Tuesday.

The 10-year Treasury yield has traded above 4% in recent days, reaching its highest levels in more than a decade. With growing concern about a recession in 2023, it may be close to a ceiling, Paulsen said.

“Each time the Fed further tightens monetary policy, recession fears are elevated relative to inflation fears. Ultimately, as the Fed becomes more and more aggressive, recession becomes a bigger worry than inflation, and bond buyers begin outnumbering bond sellers—that is, the bond market blinks,” Paulsen added.

— Jesse Pound

European markets: Here are the opening calls

European markets are heading for a higher open on Wednesday, looking to build on gains in the previous session.

The U.K.’s FTSE index is expected to open 38 points higher at 6,958 , the German DAX up 99 points at 12,864 and the French CAC up 39 points at 6,106, according to data from IG.

European markets closed higher Tuesday as the region felt the impact of the U.K.’s fiscal U-turns and anticipated new EU measures to tackle energy prices.

The British pound was 0.5% lower against the dollar at $1.1353 at 4:30 p.m. in London, after rallying Monday as new Finance Minister Jeremy Hunt scrapped most of Prime Minister Liz Truss’ fiscal policies. Truss apologized for the “mistakes” she made in her first six weeks in the position.

On the data front in Europe, U.K. inflation figures for September are due. Earnings come from Nestle, Handelsbanken, Deutsche Boerse, Metro Bank, ASOS and BHP.

— Holly Ellyatt

Source : CNBC