Wednesday, December 7, 2022
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European stocks close mixed as investors monitor inflation, central bank comments; M&S up 8.5%

  • European shares ended Wednesday's session in mixed territory as investors continued to monitor the inflation outlook.
  • A Dutch court on Wednesday ruled oil giant Royal Dutch Shell must reduce its carbon emissions by 45% by 2030 from 2019 levels.
  • Earnings in Europe came from Marks and Spencer and British Land while HelloFresh holds an annual general meeting.

European stocks closed mixed on Wednesday as investors continued to monitor the inflation outlook after central bank policymakers reiterated their dovish monetary policy stance.

The pan-European Stoxx 600 provisionally ended little changed for the session, with travel and leisure stocks adding more than 1% while banks dropped 1.1%.

Across the Atlantic, stocks on Wall Street crept higher on Wednesday after the market rally stalled Tuesday, with major indexes ending the regular session slightly lower.

Investors are awaiting a speech from Federal Reserve Vice Chair Randal Quarles on Wednesday as some concerns surrounding inflation and potential tapering continue to linger.

On Tuesday, Fed Vice Chair Richard Clarida said the central bank would be able to manage an overshoot in inflation without derailing the country's economic recovery, while San Francisco Federal Reserve President Mary Daly told CNBC that while the recovery so far is encouraging, it is "way too early" to tighten policy.

European Central Bank policymakers have also indicated that the conversation about tapering its emergency bond purchases may be premature at this stage.

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Attention on cryptocurrencies also remains with China showing its intention to continue a four-year crackdown on bitcoin trading and other cryptocurrency-related activities.

China's Inner Mongolia region has proposed punishments for companies and individuals involved in digital currency mining as it looks to further crackdown on the practice.

The move comes after Chinese Vice Premier Liu He said last week in a statement that it is necessary to "crackdown on Bitcoin mining and trading behavior" to prevent the "transmission of individual risks to the social field."

Earnings in focus

Earnings in Europe came from Marks & Spencer and British Land while HelloFresh holds an annual general meeting.

Marks & Spencer shares climbed 8.5% despite the British retailer reporting an 88% slump in annual profit as multiple lockdowns in the U.K. demolished clothing sales.

"The period of these results bears the full brunt of the various lockdowns and with M&S assuming in their base case that there will be no repeats, the numbers should represent the nadir of their fortunes," said Richard Hunter, head of markets at online platform Interactive Investor.

"If this proves to be the year to kitchen sink the numbers, then M&S needs to continue its accelerated transformation to remain relevant. All things being equal, it is expecting to achieve profits of between £300 and £350 million this year, as some exceptional costs drop away and as revenues grow to exceed pre-pandemic levels."

British IT company Softcat climbed 7% after projecting full-year results ahead of expectations.

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