By Jack Denton
European equities were broadly higher on Tuesday as the market eyed key U.S. inflation data, with a firmer pound weighing on dollar-earning companies listed in London.
The pan-European Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP +1.35% was 0.12% higher while London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.76% ended the day just above flat. The CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +1.26% in Paris climbed 0.36% and Frankfurt’s DAX /zigman2/quotes/210597999/delayed DX:DAX +2.16% rose 0.13%.
U.S. stocks were mixed by midday, with the Dow /zigman2/quotes/210598065/realtime DJIA -0.11% down while the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.47% and Nasdaq /zigman2/quotes/210598365/realtime COMP +3.25% were slightly ahead.
The U.S. consumer-price index for March, released at 8:30 a.m. Eastern, showed a 0.6% rise. The data will be scrutinized by investors, as bond yields pushed higher amid inflation concerns from continued fiscal stimulus have put sustained pressure on equity markets.
This key U.S. inflation indicator “has emerged as a key focal point for markets, given the debates surrounding inflation and its implications for monetary policy moving forward,” said Jim Reid, a strategist at Deutsche Bank.
“Indeed, part of the reason that markets have brought forward their expectations for Fed rate hikes is based around rising inflation expectations that they think the Fed might have to rein in, with two-year U.S. breakevens at 2.678% as of last night’s close,” Reid said.
Data from China boosted the outlook for the global economic recovery, with the country reporting that its March exports in dollar terms grew 30.6% year-over-year, while import growth surged 38.1%, outpacing expectations of a rise nearer 24%.
The ZEW economic research institute said that German investor morale has decreased in April, an unexpected decline, amid fears that the extension of strict lockdowns in Europe’s largest economy will hit private consumption.
Shares in Air France-KLM /zigman2/quotes/205396176/delayed FR:AF +2.57% declined more than 5%, after the airline group announced after European markets closed on Tuesday it would launch a €988 million ($1.18 billion) share issue as part of a larger recapitalization project announced last week. The ownership stake of the French state will more than double under the share issue, to near 30%, while China Eastern Airlines, which currently owns 8.8% of the company’s shares, will invest up to €168 million.
Shares in Just Eat Takeaway.com /zigman2/quotes/216303066/delayed UK:JET +6.41% jumped near 7%, after the food delivery group said in a trading update that orders in the first quarter of 2021 grew 79% from 2020 levels. Growth was particularly strong in the U.K., at 96%, where the company has poured investment into battling rivals Uber Eats and Deliveroo.
A slight strengthening of the pound has pushed down shares in large British consumer companies that do business in dollars, with Unilever /zigman2/quotes/205449809/delayed UK:ULVR -0.75% , Diageo /zigman2/quotes/205611832/delayed UK:DGE +0.03% , Reckitt Benckiser /zigman2/quotes/206856088/delayed UK:RKT -1.19% , and British American Tobacco /zigman2/quotes/209116881/delayed UK:BATS -0.05% spending much of the day in the red, though Unilever and BAT finished the day just above flat. The value of the U.K. currency /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.0900% was up more than 0.5% from lows on Monday but has since fallen back around 0.1%.
The price of bitcoin /zigman2/quotes/31322028/realtime BTCUSD -0.37% rose to a new record on Tuesday, to above $62,000, as the market readies for the float of Coinbase. The largest U.S. cryptocurrency exchange is set to begin trading on the Nasdaq on Wednesday.