European markets reach highs on U.S. inflation data

On Thursday, January 12, European markets closed at their highest level in eight months since April 2022. The Stoxx 600, the pan-European index, closed up 0.7% with most sectors in positive territory.

Retail stocks mainly led the gains, closing up 2%. However, the health care and chemical sectors finished in the red with a 0.1% decline. But sectors like autos, banks, retail and telecom all gained 1%.

Earlier this week, the U.K. FTSE 100 also gained more than 0.9%, surpassing 2018 highs during Wednesday’s trading session. Similarly, the FTSE is now approaching its all-time high of 7877.45. In yesterday’s session, both the German DAX and the French CAC 40 were up 0.74%.

Leading the market were Ubisoft, Logitech and Centrica. Shares of French video game publisher Ubisoft fell more than 21% in early trading after the company cut its sales forecast. In addition, the company also postponed the release of its new game “Skull & Bones”.

Logitech, the Swiss computer peripheral maker, fell 14% after missing its earnings forecast and sales outlook. Centrica, the British gas owner, led the European blue-chip index, jumping more than 5 percent after raising its full-year profit forecast.

European markets welcome lower U.S. inflation data

On Thursday, European stock market indices jumped following the release of U.S. inflation data.

The consumer price index, which measures the cost of a broad basket of goods and services, fell 0.1 percent for the month. Despite the decline, the overall CPI is up 6.5 percent from a year ago. But excluding energy and food prices, core CPI jumped 0.3 percent, in line with market expectations.

The decline in inflation in December 2022 was driven by a sharp drop in gasoline prices. Over the past month, gasoline prices have fallen 9.4 percent and are down a net 1.5 percent from a year ago. Fuel oil also fell 16.6 percent last month, resulting in an overall 4.5 percent drop in the energy index. Mark Zandi, chief economist at Moody’s Analytics, said:

“The’inflation is moderating rapidly. Obviously, it is still painfully high, but it is moving quickly in the right direction. I see only good news in the report, except for the highest number: 6.5 percent is way too high.”

The market may still be interested in the speeches from Fed officials this week.

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