European markets slipped slightly after UK inflation data; ASML shares up 7%

The Bank of England’s chief executive officer for markets, Andrew Houser, told a panel that the central bank could take up to 10 years to undo its emergency bond purchase programme.

However, he said the central bank is now confident enough in the gold market to institute a tightening program, Reuters reported.

The Bank of England had already confirmed in a statement that it would start selling assets held under the 838 billion pound ($944 billion) asset purchase facility on November 1, a day after the government announced its new budget.

Hauser also described the chaos in bond markets triggered by Liz Truss’ tax cut budget as a “mass liquidation event” for pension funds.

Gilt bond yields fell after the budget caused them to rise, due to a combination of Bank of England intervention and government policy reversal, but remained above the pre-budget level.

– Jenny Reed

The shares of the French-German plant processing maker Sartorius It fell 17% after it said full-year sales would be in the lower half of its target range, with reduced demand fueling the pandemic for its products now.

“We are setting our full-year outlook for 2022 within the range projected so far, but global political and economic uncertainties remain high,” said CEO Joachim Kreuzberg.

Carlsberg owner Unibrew It was down 13% as it also warned of “significant uncertainty in our business environment”.

Yesterday the Danish company reported 12% revenue growth but a 24% profit dip for the third quarter.

– Jenny Reed

Healthcare company shares Fresenius It jumped 11% in early afternoon trading after Bloomberg reported that activist investor Elliott Management will invest in the company.

Gains fell to 7.3% within 30 minutes of the news.

– Hannah Ward Glinton

ASML’s third-quarter earnings were a relief to investors.

Revenue for the third quarter of 2022 was 5.77 billion euros ($5.6 billion), beating analysts’ expectations of 5.41 billion euros, according to Reuters. That was up 10% year over year. Net profit came in at 1.7 billion euros, above market expectations.

It’s been a tough year for chip stocks, which have had to contend with high inflation and a weak global economy as the chip boom nears its end.

Companies including Samsung and Micron are feeling the effects of weak demand.

ASML shares are down about 40% this year as investor concerns spread across the chip-related stocks.

But ASML’s strong earnings allayed some of those concerns as the Dutch company held steady in the third quarter.

ASML shares are up about 6% in early trading in Europe and are up 8% before midday.

ASML sells $200 million in intense UV lithography machines to semiconductor manufacturers like Taiwan’s TSMC, who are needed to make the most advanced chips. It is the only company in the world that manufactures such machines, which gives it a kind of monopoly on this part of the supply chain and makes it one of the most important companies in the semiconductor industry.

– Arjun Kharbal

Bonds are now more attractive both in the short and long term, Giulio Renzi Ricci, head of European portfolio creation at Vanguard, told CNBC’s “Squawk Box Europe.”

Renzi Ricci has unraveled the allure of government and corporate bonds amid higher yields and continued volatility in stocks.

– Jenny Reed

The Institute for Fiscal Studies said that UK benefits are set to be 6% less than they were before the pandemic in 2023 as inflation hit 10.1%.

If the government increases the rate of state support for poor individuals and families in line with inflation, as is the norm, most working-age benefit claimants would receive around £500 ($564) less per year, according to the IFS.

“The situation for the living standards of subsidy recipients next April may be even more challenging depending on the design of the energy support package implemented from next April,” said Heidi Karjalainen, research economist at IFS.

– Hannah Ward Glinton

The past two weeks have put an “efficiency risk premium” in financial markets, Paul Donovan, chief economist at UBS Wealth Management, said on CNBC’s “Squawk Box Europe” program.

“The financial markets have judged the UK government not to be as efficient as it could be,” Donovan said.

The chip maker ASML rose 7% at 9.20 am London time after beating earnings expectations and reporting record new bookings in the third quarter.

– Hannah Ward Glinton

Chip company shares ASML It rose 5.3% after positive third-quarter earnings. Sales were better than expected and the company said it did not expect to be affected significantly by US sanctions on China.

Sartorius will perpetuate Shares tumbled 13.6% after the biotech company’s nine-month results for 2022. The rapid normalization of demand after the peak of the pandemic generated double-digit sales revenue.

– Hannah Ward Glinton

European markets are set to open higher on Wednesday, looking to build on the gains made in the previous session.

The UK’s FTSE is expected to open 17 points higher at 6,960, Germany’s DAX 29 points at 12824, and France’s CAC 12 points higher at 6,090, according to data from IG.

The Consumer Price Index rose 10.1% in September, according to the Office for National Statistics.

Reuters had expected an increase of 10%.

Increased food, energy and transportation prices have led to higher inflation.

– Hannah Ward Glinton

Shares of Apple suppliers in Asia fell after the tech company asked a manufacturer in China to halt production of the iPhone 14 Plus component as Apple reassesses demand for the product.

The information reported that two other suppliers that assemble units of this component have also significantly reduced production.

LG Innotek and SK Hynix in South Korea lost about 2%, while Japan lost TDK . company And the morata manufacture Throwing more than 1% each.

An apple The stock briefly lost $4 a share overnight, but closed the regular session 0.94% higher as major indexes advanced.

– Abigail Ng

It has been a volatile year for gold, as the precious metal was torn between growth risks, inflation, higher real interest rates and a strong dollar, Goldman analysts wrote in a note on October 11.

“In our view, there is still a lot of uncertainty about the future trajectory of US inflation, growth and rates, and the central bank’s reaction functions.”

Goldman implemented four different economic scenarios, predicting where gold prices might end up in each case.

CNBC Pro subscribers can read more here.

. futures contracts West Texas Intermediate Crude It rose about $1, or 1.33% and futures Brent crude It rose by $0.83 or 0.92% as the Biden administration is expected to release more oil from the US Strategic Petroleum Reserve.

Sources told CNBC that the plan may be announced on Wednesday.

The sources said the move aims to extend the strategic petroleum reserve delivery program, which began this spring, until December.

– Kayla Tucci, Jihee Lee

The Federal Reserve is widely expected to rise by another three-quarters of a percentage point next month, but the central bank may have reached the maximum dictate for long-term interest rates, according to Jim Poulsen of The Leuthold Group.

“There is an important precedent in the tightening cycles prior to the Fed shutdown because the bond market ‘flashes’ first. The Fed may soon try to raise the money rate to 4%, 4.5%, or even 5%. But at some point, long-term bonds may simply come to a halt. about the rally and refuse to follow the Fed’s approach,” Paulsen wrote in a note to clients on Tuesday.

The 10-year Treasury yield has been trading above 4% in recent days, reaching its highest levels in more than a decade. With growing concern about a recession in 2023, Paulsen said, he may be approaching the ceiling.

“Every time the Fed tightens monetary policy, recession fears increase relative to inflation fears. Eventually, as the Fed becomes more aggressive, the recession becomes a bigger concern than inflation, and bond buyers start to outnumber bond sellers — that is, the bond market flashes. “.

– Jesse Pound

European markets are set to open higher on Wednesday, looking to build on the gains made in the previous session.

Britain’s FTSE is expected to open 38 points higher at 6,958, Germany’s DAX 99 points at 12864, and France’s CAC 39 points higher at 6,106, according to data from IG.

European markets closed higher on Tuesday as the region felt the impact of financial shifts in the UK and new measures expected from the European Union to tackle energy prices.

The British pound was down 0.5% against the dollar at $1.1353 at 4:30 pm in London, after rallying on Monday as new Finance Minister Jeremy Hunt canceled most of Prime Minister Liz Truss’s fiscal policies. Truss has apologized for the “mistakes” she made in her first six weeks in office.

On the data front in Europe, UK inflation figures for September are due. Earnings come from Nestle, Handelsbanken, Deutsche Boerse, Metro Bank, ASOS and BHP.

– Holly Eliat