LONDON — European stocks were subdued on Wednesday amid more mixed sentiment globally overnight, as investors digested a slew of corporate earnings.
The pan-European Stoxx 600 hovered fractionally above the flatline in early trade, with retail stocks dropping 1.3% while food and beverages gained 1.2%.
The mixed start for European markets comes after a series of upbeat trading sessions in recent days as investors digested the latest earnings from the U.S.
On Tuesday, U.S. stock indexes gained as major companies continued to report strong third-quarter earnings, easing concerns that persistent Covid cases and rising costs would derail corporate America's profit recovery. Of the S&P 500 components that have reported thus far, 82% have topped expectations, according to FactSet.
Still, while reports have been strong, investors are looking for more clues from corporate America about supply chain issues and how soon these can be resolved, as well as inflation. U.S. stock index futures were flat during early premarket trading on Wednesday.
Meanwhile, shares in Asia-Pacific were mostly higher in Wednesday morning trade as China kept its benchmark lending rate unchanged. Investors in the region were also reacting to the latest report from the International Monetary Fund (IMF) on Tuesday in which it slashed its 2021 economic growth forecast for Asia. The IMF now expects the region to grow by 6.5% this year, as compared to its April forecast for a 7.6% expansion.
On the data front, British inflation slowed unexpectedly in September, rising 3.1% in annual terms after a 3.2% climb in August, the Office for National Statistics said on Wednesday.
Dean Turner, economist at UBS Global Wealth Management, noted that although consumer price inflation slowed slightly, it remains well above the Bank of England's 2% target, and the figures will be unlikely to deter the central bank from any impending rate hike.
"In our view, the forces pushing prices up are set to increase in the coming months, which suggests that inflation will be moving up before the end of year," Turner said.
"The good news for households and firms is that price pressures should ease next year, and growth will remain relatively strong, suggesting that fears about stagflation are overdone."
German producer prices rose 2.3% month-on-month in September for a 14.2% annual increase, the Federal Statistics office said Wednesday. This exceeded economist expectations for 1% monthly rise and 12.7% annually.
Earnings in focus
European investors were reacting to a busy day of earnings, with Carrefour, Atos, Metro, Sartorius, AkzoNobel, Roche, Nestle, Antofagasta and Metro Bank all reporting on Wednesday.
Nestle shares climbed 3.5% in early trade after the Swiss food giant raised its full-year growth outlook following strong third-quarter sales growth.
At the bottom of the European blue chip index, Swedish investment firm Kinnevik fell more than 5% after swinging to a third-quarter net loss.
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- CNBC's Pippa Stevens and Eustance Huang contributed to this report.
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October 20, 2021 at 11:52AM
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European markets muted amid mixed global market sentiment; Nestle climbs 3.5% - CNBC
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