Written by 1:32 pm Europe Economy

European markets open to close U.S. inflation data, earnings and news

U.S. stocks open lower; Nasdaq slides 2.7%

U.S. stocks opened lower Tuesday following the release of hotter than expected inflation data.

The Dow Jones Industrial Average was down 1.6% in early morning trade, while the S&P 500 was 2% lower and the Nasdaq was down 2.7%.

— Karen Gilchrist

U.S. stock futures fall sharply after hot inflation report

Stocks on the move: Future up 8%, Ocado down 10%

Shares of Future Plc gained 8.7% by early afternoon deals to lead the Stoxx 600, after the British media company projected that full-year adjusted operating profit would come in at the top end of market expectations.

At the bottom of the European blue chip index, British grocery technology company Ocado plunged more than 10% after warning of lower full-year sales as consumers weather soaring inflation.

– Elliot Smith

The Fed is going to pivot in 3 stages, author Nomi Prins says

The Fed is likely to 'pivot' in three stages, says Nomi Prins

The U.S. Federal Reserve could be forced to pivot away from its path of aggressive interest rate hikes in three stages, according to author Nomi Prins.

Markets expect the central bank to enact a third consecutive 75 basis point hike at its monetary policy meeting later this month, the fastest pace of monetary tightening since policymakers began using the benchmark Fed funds rate as the principal policy tool in the early 1990s.

Various Fed officials have reiterated the Federal Open Market Committee’s commitment in recent weeks to reining in inflation, but Prins told CNBC Tuesday that the acceleration of interest rate hikes to soothe the markets was disconnected from the economic reality faced by many.

– Elliot Smith

Ocado shares fall after sales warning as cost-of-living pressures bite

Ocado delivery vans in London on Jan. 21, 2022.

Mike Kemp | In Pictures | Getty Images

British grocery delivery firm Ocado led early European equity losses after forecasting a small drop in sales for 2022 and “close to break-even” earnings.

The company slid 13.05% in the first hour of trading. It said customers were choosing cheaper products and sizing down their baskets as the U.K. faces intense a sharp rise in living costs and many workers return to the office.

“As a result, the value of the average basket was down by 6% in the period, to £116, with a greater decline experienced later in the quarter during the peak summer holiday season,” the company said in a statement.

“Notwithstanding positive customer growth, the accelerating trading down and smaller baskets, particularly over the last few weeks, mean that we now expect to see a small sales decline in FY22 and close to break-even EBITDA.” 

— Jenni Reid

UK unemployment hits 48-year low while real wages fall sharply

U.K. unemployment fell to 3.6% in the three months to July, its lowest since 1974.

The economic inactivity rate, meanwhile, rose by 0.4 percentage points to a five-year high of 21.7%.

The Office for National Statistics attributed the change to a rise in long-term sickness designations and students leaving the jobs market. The increasing tightness of the labor market may fuel further inflationary pressure and cause headaches for the Bank of England.

Annual growth in real wages — taking into account inflation — excluding bonuses fell by 2.8% in the three months to the end of July.

“People will understandably be looking to their employers for help during the cost of living crisis while Andrew Bailey will be hoping that businesses don’t up salaries too high too quickly and compound inflation,” said Marcus Brookes, chief investment officer at Quilter Investors.

“However, the U.K. must brace for discontent amongst the public sector with strikes over pay continuing as budgets are stretched.”

– Elliot Smith

UBS plans to boost dividend; shares rise in pre-market

UBS Group plans to increase its dividend by 10% to $0.55 per share and expects its 2022 share repurchases to exceed $5 billion, the Swiss bank said on Tuesday.

UBS shares were indicated 1.2% higher in pre-market activity after what ZKB analyst Michael Klien called surprise news.

Read more here.

— Reuters

Stocks on the move: Future up 5%, Ocado down 12%

Shares of Future Plc gained 5.5% in early trade to lead the Stoxx 600 after the British media company projected that full-year adjusted operating profit would come in at the top end of market expectations.

At the bottom of the European blue chip index, British grocery technology company Ocado plunged more than 12% after warning of lower full-year sales as consumers weather soaring inflation.

CNBC Pro: Forget oil — coal is hot right now. Here are 2 stocks to play it, according to the pros

Coal mining in Wyoming.

Brian Brainerd | The Denver Post | Getty Images

Coal prices are at record highs and market watchers see prices going even higher as a global energy crisis looms.

“It’s almost like any or all companies are a buy,” analyst Peter O’Conner said of the booming coal sector, and reveals his favorite stock.

CNBC Pro subscribers can read more here.

— Zavier Ong

Relief rally is likely bear market bounce, Wells Fargo says

The recent relief rally in stocks is likely another bear market bounce and investors should position for more choppiness ahead, according to Wells Fargo.

“Year-do-date, the outperformance of defensive, high shareholder payout, high-quality and low-valuation stocks reminds investors of the hallmark of a bear market,” global portfolio and investment strategist Chao Ma wrote in a Monday note.

Such recoveries happen in nearly every bear market and many are quickly reversed, leaving investors with regrets, they added.

“Although it is difficult to predict the bottom of a bear market, in the past, market bottoms were typically preconditioned by over-pessimistic market sentiment and a sign of definitive improvement in the underlying economic or market issue,” Ma said. “We believe we are not there yet in either regard.”

In the meantime, Ma recommends investors look for defensive stocks with low volatility, high dividends and share repurchase yields. He also says investors should go for high quality names with profitability and leading market share and affordable market price.

—Carmen Reinicke

U.S. stock futures rise ahead of Tuesday CPI report

U.S. stock futures were higher Monday night as Wall Street looks ahead to the August consumer price index report set to be released Tuesday morning. The report will give investors an update on the inflation situation in the U.S. and is one of the last pieces of data the Federal Reserve will see ahead of its September meeting.

Dow Jones Industrial Average futures gained 55 points, or 0.17%. S&P 500 and Nasdaq 100 futures climbed 0.18% and 0.21%, respectively.

—Carmen Reinicke

CNBC Pro: Want to invest in real estate? These REITs are among analysts’ favorites

Real estate investment trusts — or REITs — are coming back to the spotlight after a volatile year for many asset classes.

Analysts from Morgan Stanley and Citi highlight REITs from two sectors that they say could outperform the wider market, and remain resilient in a recession.

CNBC Pro subscribers can read more here.

— Weizhen Tan

European markets: Here are the opening calls

European stocks are expected to open cautiously higher on Wednesday with the U.K.’s FTSE index seen 18 points higher at 7,560, Germany’s DAX 33 points higher at 13,944, France’s CAC 40 up 18 points at 6,616 and Italy’s FTSE MIB up 42 points at 23,029, according to data from IG.

Data releases include preliminary euro zone unemployment data for the second quarter as well as second quarter gross domestic product. The latest U.K. inflation numbers for July will be released as well as preliminary second quarter Dutch GDP.

Earnings come from Uniper, Carlsberg, Persimmon, Balfour Beatty, BAT and National Grid.

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