by Diana Mandia

(Reuters) – European stocks ended slightly higher on Wednesday as investors try to assimilate the latest U.S. inflation data, which showed a slowdown in March but remained elevated, to see if a an imminent halt to interest rate hikes can be envisaged.

In Paris, the CAC 40 ended up 0.09% at 7,396.94 points after hitting a new historic high at 7,431.87 points in session.

The British Footsie gained 0.5% and the German Dax 0.31%.

The EuroStoxx 50 index ended with a gain of 0.02%, the FTSEurofirst 300 of 0.13% and the Stoxx 600 of 0.13% as well.

Markets, which experienced some volatility at the end of the session, initially welcomed the US inflation figures released in the early afternoon, which showed a stronger than expected slowdown in prices in March, while remaining well above the Federal Reserve’s (Fed) 2% target.

Consumer prices in the United States rose 0.1% last month after +0.4% in February, while economists polled by Reuters forecast a rise of 0.2% in one month on the other. Over one year, inflation stands at 5%, more than twice the Fed’s target.

“I am waiting for inflation to crack (…) It is moving in the right direction (…) but in the absence of a month, two months or three months when inflation would reach our target, it’s hard to say we’re headed toward that goal,” Richmond Fed President Thomas Barkin said in an interview with CNBC.

For his part, Luis de Guindos, Vice-President of the ECB, for his part warned that underlying inflation in the euro zone was proving difficult to control, while concerns about energy prices shifted to “basic” prices, which continue to rise.

VALUES

In Paris, LVMH ended with a loss of 0.4% before the publication, after the close, of its quarterly results, which posted a 17% increase in sales thanks to the rebound in China.

L’Oreal for its part dropped 1.1% after the lowering of the recommendation of Deutsche Bank to “hold” against “buy” on the value.

Scor took 2.8% after the presentation of its annual objectives to IFRS 17 standards.

Elsewhere in Europe, Swedish truckmaker AB Volvo jumped 7.3% on record first-quarter profit.

German lab Merck plunged 7.3% as the Food and Drug Administration (FDA) suspended admitting new patients for treatment with the multiple sclerosis drug evobrutinib due to suspicion of liver damage caused by the molecule.

AT WALL STREET

At the time of the closing in Europe, the Dow Jones took 0.21%, the Standard & Poor’s 500 0.15%, and the Nasdaq 0.09%, investors calmly digesting inflation data.

CHANGES

The “dollar index”, which measures the variations of the greenback against a basket of currencies, fell sharply after the publication of US inflation data and fell by 0.67%, while the euro took advantage of this to back up 0.75% to $1.0992.

RATE

Eurozone bond yields rose on Wednesday despite US inflation slowing in March, with analysts pointing to “hawkish” comments from Austria’s central bank governor Robert Holzmann.

He told a German newspaper that the ECB should continue raising interest rates and that another 50 basis point hike in May was warranted.

The ten-year German Bund rate gained more than seven basis points, to 2.372%, while the two-year rate also gained more than seven points, to 2.794%.

In the United States, the American 10-year yield is stable at 3.4318%, while the two-year yield is down slightly, at 4.007%.

OIL

Oil prices rose sharply on Wednesday after inflation data in the United States, the world’s biggest consumer of oil, amid optimism that the Fed’s rate hike cycle will end soon.

The weakening of the dollar also benefited crude prices.

Brent rose 1.35% to 86.77 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.35% to 82.63 dollars.

(Written by Diana Mandiá, edited by Blandine Hénault)

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