European shares were flat-to-slightly-higher at the open on Wednesday as investors monitored the war in Ukraine and digested the latest soaring UK inflation numbers.
The pan-European Stoxx 600 index was up 0.06% in early deals, with energy stocks in demand as fears of oil supply disruption from the Russia-Ukraine conflict helped keep commodity prices higher. BP, Shell and Repsol shares were all higher on the news.
Ukraine President Volodymyr Zelenskiyy said talks with Russia were still moving forward as his country continued to suffer shelling in several cities and the humanitarian crisis began to look increasingly desperate.
In the UK, official figures showed February inflation hit 6.2% as prices soared again and placed British households under more pressure. Image-conscious millionaire Finance Minister Rishi Sunak is in the spotlight later on Wednesday when he presents his Spring statement to parliament.
“The UK inflation reading for February is a bit like testing the temperature of a hot bath before a few more kettles of boiling water are poured in,” said Hargreaves Lansdown analyst Susannah Streeter.
“This is before the commodity chaos unleashed by the invasion of Ukraine fully shows up in the figures, so the expectation is that with inflation becoming hotter, the Bank of England will try and turn on the cold taps by raising rates more assertively.”
Markets.com chief analyst Neil Wilson was more pointed in his assessment of what to expect from Sunak, saying he had a “difficult job to ease things, if he were to be so inclined” with the Spring statement.
“We don’t really know if he cares that much. Millionaires married to billionaires are not ‘men of the people’ and have little feel for what it’s like to be poor,” he said.
“They don’t get that a few hundred pounds could make all the difference – abandoning the NI rise would be the best strategy, whilst Universal Credit must surely rise. He has an extra £35bn to play with and the jump in inflation underscores the urgency to act. The Spring Statement is not the Budget, but it’s a set-piece event for the chancellor and the cost-of-living crisis is upon us now.”
In equity news, shares in Auto1 Group fell 6% despite reporting higher full-year profits.
