European Stock Markets Close Higher as Investors Keep an Eye on Inflation and American Earnings

European Stock Markets Close Higher as Investors Keep an Eye on Inflation and American Earnings

The pan-European Stoxx 600 gained 0.5% at the closing, somewhat tempering gains made earlier. While cars fell 1.7%, health care stocks increased 1.4% to lead the rally.

Investors worldwide are closely watching inflation data for hints as to how long and how much central banks will tighten monetary policy.

In the U.S. on Thursday, the December consumer price index report was in line with economist expectations for a monthly dip of 0.1% but a 6.5% rise in consumer prices year over year, compared with a 0.1% monthly gain in November and an annual rise of 7.1%.

Ed Harker, president of the Federal Reserve Bank of Philadelphia, said in a speech on Thursday that significant interest rate increases are likely in the past because inflation appears to have peaked. Harker added that while the Federal Reserve will still need to raise rates, it may do so in increments of 25 basis points at upcoming meetings.

Shares in Asia-Pacific were mostly higher on Friday, though Japan’s Nikkei 225 slumped 1.25%, dragged down by a sharp decline for Uniqlo owner Fast Retailing as well as broad weakness in food and electronics stocks.

Meanwhile in the U.S., the stock market is set to end a winning week on a sour note as JPMorgan Chase led a decline in bank shares after it warned a recession was its base case for the year.

Germany GDP climbed 1.9% in 2022

The German gross domestic product rose 1.9% for the full year 2022, figures published Friday showed.

Ruth Brand, president of the Federal Statistical Office, said Berlin’s economy had been impacted by the war in Ukraine, energy price rises, material shortages, delivery bottlenecks, food price inflation and a tight labor market.

“Although these difficult conditions persist, the German economy as a whole managed to perform well in 2022,” she said.

The German GDP was 0.7% higher in 2022 than in 2019, the last year prior to the onset of the Covid-19 pandemic.

The Group of Seven’s oil price cap scheme intended to limit Russian oil export revenues is working “so far so good,” according to Amos Hochstein, special presidential coordinator to President Joe Biden.

“As oil prices have come down, there’s no doubt that the price cap has, so far, and there’s a long way to go, as we sit today, achieved our interest, which was to have continued supply of oil on the market to support economic growth while limiting the value that oil makes for Putin,” he told CNBC’s Hadley Gamble in Abu Dhabi on Friday.