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European stocks set to falter at open after hot U.S. inflation data

LONDON — European stocks are expected to open flat to lower on Thursday as global markets falter following the latest U.S. inflation reading showing consumer prices rose once again in December.

The U.K.’s FTSE index is expected to open unchanged at 7,539, Germany’s DAX is seen opening 11 points lower at 16,029, France’s CAC 40 down 9 points at 7,222 and Italy’s FTSE MIB 31 points lower at 27,537, according to data from IG.

Global markets are digesting the latest red-hot inflation reading from the U.S. on Wednesday which showed the December reading for the consumer price index, a gauge of prices across a broad spectrum of goods, increased 7%, according to the Bureau of Labor Statistics.

On a monthly basis, CPI increased 0.5%. Economists expected the consumer price index to rise 0.4% in December, and 7% on a year-over-year basis, according to Dow Jones. 

Some economists think inflation could be showing signs of peaking, so the report will be looked at closely for the longer-term trend.

Though CPI is not the Federal Reserve’s primary inflation gauge, policymakers are watching a variety of measures as they embark on the first stages of tightening the most accommodative policy measures in the central bank’s history.

Fed Chairman Jerome Powell told Senate lawmakers Tuesday that he expects interest rate increases this year along with the end of the monthly bond-buying program in March and a reduction in asset holdings. Powell said the moves likely will be needed to control inflation at a time when the economy has recovered substantially from the pandemic shock.

The December producer price index, another measure of inflation, is set to come out on Thursday.

Big banks in the U.S. are also in focus with a number kicking off the fourth-quarter earnings season on Friday. JPMorgan Chase, Citigroup and Wells Fargo are slated to release quarterly results before the U.S. trading session starts.

In Europe, earnings come from Geberit while Tesco, Marks & Spencer and ASOS release trading statements and consumer sentiment data is released for the U.K., France and Germany.

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— CNBC’s Jeff Cox contributed to this market report.

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