Europe open: Shares slip as mining stocks struggle, inflation weighs
European stocks retreated at the opening on Wednesday after strong gains in the previous session, as inflation fears persisted.
The pan-European Stoxx 600 index was down 0.13% at 0842 GMT, after hitting its highest level for more than a year on Tuesday. Regional bourses were mixed, with London’s FTSE 100 down 0.53% as mining stocks slipped, with BHP and Rio Tinto lower as copper and iron ore prices softened.
Tech stocks rallied overnight in the US, with the Nasdaq making solid gains. Investors were also eyeing US February CPI figures out later today.
In economic news, data showed China’s February factory gate prices rose at the fastest pace since November 2018.
"While yesterday’s Nasdaq rally was a positive development it came against a backdrop of a drop in US 10-year yields. If it can continue to move higher in the face of higher rates then the rally might be more convincing, however the higher inflation narrative isn’t likely to subside any time soon, which means any sustained Nasdaq rally could well be vulnerable to setbacks," said CMC Markets analyst Michael Hewson.
"This morning’s sharp rise in Chinese PPI for February to 1.7% could well be another leading indicator for a rise in inflationary pressures in the coming weeks, along with this afternoon's US CPI numbers."
Elsewhere in equity markets, Spirax-Sarco shares rose 4.22% as the engineering firm reported a better-than-expected full-year profit on Wednesday, while revenues were in line after a stronger-than-anticipated fourth quarter.
Quilter shares were higher as full-year results came in ahead of market expectations on Wednesday, with adjusted profit before tax on a continuing management basis falling to £168m from £182m.
Shares in UK broadcaster ITV fell almost 4% as breakfast presenter Piers Morgan flounced off stage and later resigned over criticism of his remarks about members of Britain’s royal family.
“Are they down because of this event or just amid his departure? Investors may be a little worried about the loss of ratings for GMB – it wasn’t exactly doing that well before he joined and its primetime slot will have repercussions for ads,” said Markets.com analyst Neil Wilson.
“Love or loathe, Morgan boosted ratings. It could also be that investors are worried about an investigation over comments made by Morgan on air.”
“Shares were hit yesterday after it revealed the way in which lockdowns have hit ad revenues, but indicated things are picking up and studios can drive new growth. Deutsche Bank today calls it a buy. You cannot be owning ITV and worry about one host, can you?”
Zara-owner Inditex slipped 1.2% after it reported a 70% fall in 2020 net profit as a year of global lockdowns kept many of its shops shut.
Just Eat Takeaway.com rose 2.9% as the food delivery company said it would keep up its investment drive after reporting surging sales and a wider annual loss.