LONDON – European shares are expected to open lower than flat on Thursday as global markets falter after the latest US inflation reading showed consumer prices rising once again in December.
According to IG data, UK’s FTSE index is expected to remain unchanged at 7,539, Germany’s DAX is down 11 points at 16,029, France’s CAC is down 409 points at 7,222 and Italy’s FTSE MIB is 31 points lower at 27,537.
Global markets are digesting the latest red-hot inflation reading from the US on Wednesday, with the December reading for the Consumer Price Index, a gauge of prices across a broad spectrum of goods, up 7%, according to the Bureau of Labor Statistics.
The CPI grew 0.5% on a monthly basis. Economists expected the consumer price index to rise 0.4% in December and 7% on a year-over-year basis, according to the Dow Jones.
Some economists believe that inflation is showing signs of peaking, so the report will be watched closely for longer-term trends.
Although the CPI is not the Federal Reserve’s primary inflation gauge, policymakers are looking at a range of measures as they are in the first stages of tightening the most favorable policy measures in central bank history.
Fed Chairman Jerome Powell told Senate lawmakers on Tuesday he expects an interest rate hike in March this year to coincide with the end of the monthly bond-buying program and reduction in asset holdings. Powell said measures would be needed to control inflation at a time when the economy has largely recovered from the shock of the pandemic.
The December producer price index, another measure of inflation, is due out on Thursday.
Large banks in the US are also in focus with the start of the fourth quarter earnings session on Friday. JPMorgan Chase, Citigroup and Wells Fargo will release quarterly results before the start of the US trading session.
In Europe, earnings come from Geberit while Tesco, Marks & Spencer and ASOS released trading statements and consumer sentiment data for the UK, France and Germany.
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— CNBC’s Jeff Cox contributed to this market report.