Inflation Cools, European Markets Await FOMC
European stocks opened higher on Wednesday, as investors weighed the latest UK inflation data and monitored global market developments. The Stoxx 600 index rose about 0.5% shortly after the open, with the FTSE 100 and CAC 40 each gaining 0.3%, while the DAX rose 0.4%.
Amid the index gains, Bayer was the focus of negative sentiment. Shares of the German life sciences company fell about 6.8% in early trading after its Monsanto unit proposed a $7.25 billion payment to settle a lawsuit alleging its Roundup herbicide causes cancer.
Bayer stated that its provisions and litigation liabilities are expected to rise from 7.8 billion euros to 11.8 billion euros. The company also estimates that around 5 billion euros will be allocated to litigation-related payments in 2026 and expects negative free cash flow this year.
In the UK, inflation fell to 3% in January according to the Office for National Statistics, in line with economists' forecasts surveyed by Reuters, from 3.4% in the 12 months to December. David Smith, a portfolio manager at Henderson High Income Trust, said this data signals that inflationary pressures are easing and opens the door to further interest rate cuts by the Bank of England if inflation reaches 2% by year-end.
Following the release of the inflation data, which met expectations, the pound sterling was flat against the US dollar at $1.3562, while UK government bond yields (gilts) were also relatively stable. Earlier on Tuesday, sterling weakened and yields fell after data showed UK unemployment rose to a five-year high and wage growth slowed.
The earnings season is also in focus, with companies such as Glencore, BAE Systems, Orange, and Euronext scheduled to release results on Wednesday. Meanwhile, in Asia, markets strengthened in relatively quiet trading as several markets, including mainland China, Hong Kong, Singapore, Taiwan, and South Korea, were closed for the Lunar New Year.
In the United States, stock futures moved nearly flat after a sluggish Tuesday session. Market participants await the minutes of the Fed's January policy meeting, but this week's main catalyst is expected to be Friday's release of the PCE Price Index—the Fed's favorite inflation indicator—which will provide additional clues regarding economic conditions and the direction of interest rates. (asd)
Source: Newsmaker.id
