Europe open: Rally continues as investors eye German CPI

By Frank Prenesti

The new-year rally in European shares continued on Tuesday with investors looking ahead to inflation data from Germany.
The pan-regional Stoxx 600 was up 1.17% at 0845 GMT, with all major bourses higher. German CPI data is due at 1300 GMT, with consumer prices expected to have risen by 10.7% year on year in December, compared to an 11.3% increase in November.

Stocks finished 1.6% higher on Monday after positive eurozone manufacturing data indicated the single currency bloc may have turned the corner as supply chain disruption dissipated and inflationary pressures eased.

China’s December Caixin manufacturing PMI fell to 49 versus 49.4 month-on-month, hitting its lowest level in three months and marking the fifth straight monthly decline in factory activity.

The larger, official PMI survey hit a three-year low of 47, well below the 50 level that divides expansion from contraction.

“Recessionary concerns will again top the agenda, underpinned by high inflation and rising interest rates. This in turn could point to a troubled January as investors search for positive indications that the tightening policies of the central banks may begin to ease given weakening economic data,” said Interactive Investor head of markets Richard Hunter.

“There is, however, little sign of this being an imminent move and it seems that interest rates may yet go somewhat higher and even stay at those elevated levels for the entirety of the year.”

In equity news, Germany’s Brenntag gained 5.0% after the chemicals distributor disclosed it is ending talks with smaller US rival Univar Solutions on a possible takeover.

Reporting by Frank Prenesti for Sharecast.com

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