European stocks close higher despite inflation fears; Marks & Spencer up 16%

The pan-European Stoxx 600 closed up by 0.2% provisionally, with media shares climbing 1.3% to lead the gains

LONDON — European stocks closed slightly higher on Wednesday as market participants digested a slew of earnings and hotter-than-expected inflation readings from the U.S

The pan-European Stoxx 600 closed up by 0.2% provisionally, with media shares climbing 1.3% to lead the gains while tech shares on the other hand sank 1.3%

Investors are assessing the release of the latest U.S. consumer price index, a key inflation reading, on Wednesday. The consumer price index showed a year-on-year increase of 6.2% in October, the sharpest in 30 years.

Core CPI, which excludes food and energy and is the Federal Reserve’s preferred measure of inflation, rose by 0.6% month-on-month and 4.6% annually, also slightly exceeding economist expectations

Hussain Mehdi, macro and investment strategist at HSBC Asset Management, said although the bank expects the period of high inflation to be “transitory,” there is scope for the near-term peak in inflation to remain “uncomfortably high

“This implies the risk of a faster Fed taper, particularly if longer-term inflation expectations edge up to undesirable levels and wage growth continues to accelerate, and the potential for increased market volatility,” Mehdi added

The U.S. October producer price index came in as expected Tuesday, with PPI rising 0.6% month-on-month, in line with estimates. Wholesale prices jumped 8.6% in October from a year ago, however, the hottest annual pace on record in almost 11 years

U.S. equities were slightly lower on Wednesday following the release of the inflation numbers

In Asia, major markets fell, also on the back of fears around inflation. China’s consumer price index for October rose 1.5% from last year, against expectations in a Reuters poll for a 1.4% increase. Producer prices, however, rose more than expected

Back in Europe, German consumer price index (CPI) inflation came in at 4.5% year-on-year in October and 0.5% month-on-month, the federal statistics office said Wednesday

Earnings in focus

In a busy day for earnings in Europe, reports before the bell came from Credit Agricole, Engie, Alstom, EDF, Allianz, Continental, Dialog, E.On, Infineon, Siemens Energy, ABN Amro, Thomas Cook and Marks & Spencer, among others

Marks & Spencer shares surged 16.5% after the British retailer posted strong third-quarter earnings

ITV shares jumped 15.1% after the U.K. media company forecast record full-year advertising sales in 2021

At the bottom of the European blue chip index, British advertising agency S4 Capital slid 10.3% on the back of its trading update