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European markets brighten, Stoxx 600 closes 1.7% higher
Europe’s Stoxx 600 index ended the session provisionally 1.7% higher, with retail stocks leading the charge with a 2.8% gain.
The boost came in part from sportswear brands including Puma and Adidas, which led European shares to gain 9.5% and 6.8% respectively.
They were lifted by better-than-expected second-quarter earnings from Nike, whose U.S. shares rose 13% as the company fueled hopes that big corporate earnings can weather the coming recession quite well.
France’s CAC 40 rose 2%, the UK’s FTSE 100 rose 1.7% and Germany’s DAX rose 1.5%.
— Jenny Reid
Stocks open higher, Dow rises 300 points
Stocks opened higher on Wednesday.
The Dow Jones Industrial Average gained 303 points, or 0.92%. The S&P 500 rose 0.66% and the Nasdaq Composite rose 0.35%.
— Samantha Subin
Hungary must avoid recession next year, says Prime Minister Viktor Orban
Hungarian Prime Minister Viktor Orban said on Wednesday that the country must avoid recession next year and bring its inflation down to single digits by the end of 2023.
According to Reuters, the head of state said in a briefing that Hungary will likely face an energy bill next year costing between 17 billion and 20 billion euros ($18 billion to $21 billion). He added that his government would be able to raise the funds to cover this expenditure.
Orban said there would be no need to approach the International Monetary Fund for additional financing.
Hungary’s economy is facing a slowdown and currently has the highest central bank interest rates in Europe at 23.1%. Annual inflation is expected to rise to between 26% and 27% in the coming months, as reported by Reuters.
— Hannah Ward-Glenton
UK retail sales unexpectedly rise in December
British retailers reported a year-on-year increase in sales in December but expect purchases to fall again in 2023, according to a survey by the Confederation of British Industry.
Retailers and a Reuters poll of economists had expected demand to see a year-on-year fall this month due to the cost of living crisis in the UK
The CBI’s trade index rose to +11 in December from -19 in November, well above the -21 estimated by retailers. Forecasts indicate that the sales balance will fall to -17 in January.
— Hannah Ward-Glenton
Good quality corporate debt and gold are where you want to be next year, says analyst.
Good quality corporate debt and gold are where you want to be next year, according to CrossBorder Capital CEO Michael Howell.
Howell also said the US Federal Reserve may turn in liquidity on Wednesday before it in interest rates on “Squawk Box Europe”.
Stocks on the move: Uniper up 4.7% as EU clears state bailout
Shares of the energy giant Uniper rose at 10:30 am. London time rose 4.7% after shareholders on Monday approved a rescue deal offered by the German government.
The European Commission approved the plan on Tuesday. Reuters reported the move has already cost Berlin 50 billion euros ($53 billion) and will involve up to 34.5 billion euros ($36.60 billion) in further cash injections until 2024.
The company has warned that it faces collapse if a deal is not reached and that shareholders could be left with nothing.
As Germany’s largest importer of Russian gas, Uniper has been destabilized by the rise in market prices and the sharp cut in deliveries this year.
Under various bailout conditions, the company must sell its 84% stake in Russian firm Unipro, its German district heating arm and parts of its North American power business by 2026.
“The stabilization of Uniper has been achieved,” said CEO Klaus-Dieter Maubach. “We will do everything in our power to find the best owners for the assets and businesses that will be sold.”
Germany must also have an exit strategy in place by the end of next year and aims to reduce its stake to no more than 25% plus one share by the end of 2028.
Despite the increase in recent news, Uniper’s share price remains down more than 90% in the year to date.
Sportswear brands make gains after Nike results
Shares of European sportswear brands rose after Nike beat its latest earnings estimates.
Puma topped the pan-European Stoxx index with gains of 7.4%, followed by JD Sports and Adidas, which were up 7% and 6.6% respectively.
Nike shares rose more than 9% in after-hours trading in the US after the activewear maker posted stronger-than-expected revenue and profit.
— Hannah Ward-Glenton
CNBC Pro: Fund manager says a recession is ‘looming’ — and names cheap stocks to play it
Market watchers are increasingly worried about a looming recession and fund manager Steven Glass is no exception.
Against this backdrop, he says he focuses on companies with earnings visibility that trade at attractive valuations.
His picks include a Big Tech name he says is “extremely cheap” with “huge margin potential.”
Pro subscribers can read more here.
— Zavier Ong
Expect a more challenging environment ahead, says Atlantic Equities
Atlantic Equities analysts expect a more challenging backdrop for the global consumer in 2023.
“Inflation may have peaked on an underlying basis, but input costs remain high and companies will at least try to hold if not take further price cuts in some cases,” analyst Edward Lewis said in a note on Tuesday. “This could become more challenging as levels of elasticity begin to normalize with US retailers starting to push back on prices, in line with where European peers have been all year.”
He highlighted Coca-Cola and Pepsi as some of his favorite consumer picks, citing “category momentum, ongoing investment and strong execution supporting increased growth.”
— Tanaya Machel
Stock market has lost $11.7 trillion so far this year
It’s been a rough year for stocks, which are currently in a bear market and down year to date.
From the market’s annual high on Jan. 3 through this morning, U.S. stocks have lost $11.7 trillion in market capitalization, according to data from Bespoke Group.
“The maximum withdrawal was $13.6 trillion at the low on 9/30, so we’ve seen market cap increase by just under $2 trillion since then,” analysts wrote Tuesday. “In dollar terms, this withdrawal has been more extreme than anything investors have ever experienced. It’s pretty deflationary if you ask us!”
Of the $11.7 trillion, more than $5 trillion in losses came from just five companies – Apple, Microsoft, Amazon, Alphabet, Meta and Tesla.
European markets: Here are the opening calls
European markets are headed for a higher open on Wednesday, reversing a negative trend in the previous session.
The UK’s FTSE 100 index is expected to open 23 points higher at 7,389, Germany’s DAX 99 points higher at 13,969, France’s CAC with 34 points on 6,478 and Italy’s FTSE MIB 137 points out of 23,830, according to data from IG.
There are no big earnings or data releases.
— Holly Elliott