European markets stall after UK inflation data; ASML up to 8%


UK profits to be 6% below pre-pandemic levels, says IFS

Profits in the UK are forecast to be 6% below their pre-pandemic value in 2023 as inflation hits 10.1%, the Institute for Fiscal Studies said.

If the government raises the rate of state support for the poorest individuals and families in line with inflation, as is typical, most working-age benefit claimants will receive around £500 ($564) less per year, according to IFS.

“The situation for the living standards of benefit recipients next April could be even more difficult depending on the design of the energy support package in place from next April,” said Heidi Karjalainen, research economist at IFS.

— Hannah Ward-Glenton

UK markets now come with a ‘competition risk premium’, says economist

The past two weeks have put a “competitive risk premium” on financial markets, said Paul Donovan, chief economist at UBS Wealth Management, on CNBC’s “Squawk Box Europe.”

“The financial markets have judged that the UK government is not as competent as it could have been,” Donovan said.

Chip company ASML is up 7%

Chipmaker ASML is up 7% as of 9:20am London time after beating earnings expectations and reporting record new bookings in the third quarter.

— Hannah Ward-Glenton

Stocks on the move: ASML up 5%, Sartorius down 14%

Chip Company Stock ASML they are up 5.3% after positive earnings in the third quarter. Sales were better than expected and the company said it did not expect to be hit hard by US sanctions on China.

Sartorius Stedim shares have fallen 13.6% after the biotech company’s nine-month results for 2022. A rapid normalization of demand after the height of the pandemic generated double-digit sales revenue.

— Hannah Ward-Glenton

European markets: here are the opening calls

European markets head for a higher open on Wednesday, looking to build on gains from the previous session.

The UK’s FTSE index is expected to open 17 points higher at 6,960, the German DAX 29 points higher at 12,824 and the French CAC 12 points higher at 6,090, according to IG data.

UK inflation rises to 10.1% as food prices soar

The consumer price index rose 10.1% in September, according to the Office for National Statistics.

Reuters had forecast a 10% increase.

Rising prices for food, energy, and transportation fueled the rise in inflation.

— Hannah Ward-Glenton

Apple Supplier Stocks Fall on Report of iPhone 14 Plus Production Cut

Shares of Apple suppliers in Asia fell after the tech company reportedly asked a manufacturer in China to halt production of an iPhone 14 Plus component while Apple reassessed demand for the product.

The Information reported that two other vendors that assemble modules from that component have also drastically cut production.

LG Innotek and SK Hynix in South Korea lost about 2%, while Japan TDK Corporation Y Murata Manufacturing shed more than 1% each.

of Apple Stocks briefly lost $4 a share overnight, but closed the regular session 0.94% higher as major indices gained.

— Abigail Ng

CNBC Pro: Goldman Sachs outlines four economic scenarios and predicts how gold will perform in each

It’s been a choppy year for gold, with the precious metal “torn between growth and inflation risks and higher real rates and a strong dollar,” Goldman analysts wrote in an Oct. 11 note.

“In our view, there remains a lot of uncertainty surrounding the future path of inflation, growth, rates and the US central bank’s (CB) reaction functions.”

Goldman ran four different economic scenarios and predicted where gold prices might end up in each case.

CNBC Pro subscribers can read more here.

US crude futures rise $1 a barrel on expectations Biden will release oil from the Strategic Petroleum Reserve

futures of West Texas Intermediate Crude were up about $1, or 1.33%, and futures for Brent Crude rose $0.83, or 0.92%, as the Biden administration is expected to release more oil from the US Strategic Petroleum Reserve.

The plan could be announced on Wednesday, sources told CNBC.

The move aims to extend SPR’s current delivery schedule, which began this spring, through December, the sources said.

–Kayla Tausche, Jihye Lee

How much higher can the Fed push the 10-year yield?

The Fed is widely expected to raise another three-quarters of a percentage point next month, but the central bank may be reaching its limit for dictating long-term interest rates, according to Jim Paulsen of The Leuthold Group.

“There is considerable precedent in past tightening cycles in which the Fed was shut down by the bond market ‘blinking’ first. At this point, longer-dated bonds may simply stop rising and refuse to follow suit.” the Fed,” Paulsen wrote in a note to clients on Tuesday.

The 10-year Treasury yield has traded above 4% in recent days, hitting its highest levels in more than a decade. With growing concern about a recession in 2023, it may be close to a ceiling, Paulsen said.

“Every time the Fed tightens monetary policy further, recession fears increase relative to inflation fears. Ultimately, as the Fed becomes increasingly aggressive, recession becomes a bigger concern.” than inflation, and bond buyers start to outnumber bond sellers, meaning the bond market flickers,” added Paulsen.

—Jesse Libra

European markets: here are the opening calls

European markets head for a higher open on Wednesday, looking to build on gains from the previous session.

The UK’s FTSE index is expected to open 38 points higher at 6,958, the German DAX 99 points higher at 12,864 and the French CAC 39 points higher at 6,106, according to IG data.

European markets closed higher on Tuesday as the region felt the impact of UK fiscal U-turns and anticipated new EU measures to tackle energy prices.

Sterling was down 0.5% against the dollar at $1.1353 at 4:30 p.m. in London, after rallying on Monday as new finance minister Jeremy Hunt scrapped most of the government’s fiscal policies. Prime Minister Liz Truss. Truss apologized for the “mistakes” she made in her first six weeks on the job.

Turning to data in Europe, UK inflation figures for September will be released. Profits come from Nestlé, Handelsbanken, Deutsche Boerse, Metro Bank, ASOS and BHP.

— Holly Ellyatt


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