European shares haled gains at midday on Wednesday, despite data showing persistent rising inflation in the euro zone and UK.
The pan-European Stoxx 600 index was up 0.15%. Eurozone inflation rose to a 13-year high as expected in October as rising energy prices hit household budgets.
Headline annual inflation rose to 4.1% from 3.4% a month earlier, matching an earlier estimate and market expectations. The increase was driven by the surging cost of energy, which offset downward revisions to food, alcohol and tobacco price rises. The core rate nudged higher by 0.1 percentage point to 2%, just below the initial estimate and consensus of 2.1%.
Britain’s FTSE 100 was down 0.27% as consumer price index inflation came in at an annual 4.2% in October, its highest for almost a decade, with energy and second-hand car costs soaring.
Central banks are struggling to judge whether rising prices are the result of short-term factors as economies reopen or are becoming entrenched. European Central Bank president Christine Lagarde on Monday said price rises inflation would be more intense and long-lasting than expected but that tightening monetary policy could stall the recovery.
“Although the ECB has stated that it sees the current price pressures easing in 2022, and our baseline is that monetary policy will remain accommodative, the latest data will indeed reignite the debate on policy measures,” said Katharina Koenz at Oxford Economics.
“However, there isn’t much the ECB can do about higher energy prices and supply bottlenecks in the short-term anyway. Moreover, we still expect energy price pressures to fall back sharply next year thanks to an easing of the supply constraints.”
Koenz stuck to expectations that inflation would “slow meaningfully” over the course of the second half of 2022 heading towards 1% towards the end of they year.
In equity news, Siemens Healthineers gained 4.7% in early trade after raising total synergy targets for its recent acquisition of U.S. rival Varian.
Polish parcel locker company InPost plunged more than 11% after cutting its full-year guidance amid slower-than-expected growth in the e-commerce market.
Shares in thermal energy management and pumping firm Spirax‐Sarco Engineering fell 6% as the company said it still expected to report record annual profits, though it also warned that supply-chain issues were hurting margins.
Renewable energy supplier SSE was lower despite posting a rise in profits and announcing a 65% hike in its capital expenditure programme.
Swedish online gambling giant Evolution Gaming plunged 9.7% on allegations that it had been offering its services illegally in countries that are currently under US sanctions.
