U.S. Stocks Advanced After 8.3% Inflation Rate, European Stocks Rally

Barry Adams
11 May, 2022
New York City

U.S. stocks climbed higher after April inflation rate edged slightly lower from March but stayed near the 4-decade high..

The S&P 500 index increased 0.7% to 4,027.15 and the Nasdaq Composite gained 0.2% to 11,766.09.

The futures earlier had advanced more than 1% but turned briefly negative after the release of the inflation data.  

 Consumer prices in April rose 0.3% or 8.3% annualized rate compared to March increase of 1.2% or 8.5% annualized rate. 

Core rate of inflation which excludes energy and food prices increased 0.6% in April after rinsing at 0.3% in March. 

Shelter, food, airline fares, gasoline, and new vehicles were the largest contributors to inflation in the month.  

Investors will also review the weekly petroleum inventories report at 10:30 a.m. ET, Treasury auction at 1:00 p.m. ET and Treasury statement at 2:00 p.m. ET. 

Last week, crude oil inventories rose 1.3 million barrels but gasoline inventories declined 2.2 million barrels. 

The U.S. government deficit is expected to reach $200 billion in April after reaching $192.7 million in March. 

European markets surged after the release of latest inflation data and China reported a decline in virus cases. 

The DAX index jumped 1.5% to 13,730.13, the CAC-40 index jumped 2.1% to 6,244.49 and the FTSE 100 index gained 1% to 7,314.30. 

German inflation in April rose to 7.4% after rising at 7.3% in March from a year ago, Destatis reported earlier in the day. 

April Inflation was record high since German reunification in 1990. 

Thyssenkrupp surged 11% after the steelmaker lifted sales and operating income outlook for the full-year. 

 Bayer AG dropped 6% after the U.S. President Biden's administration asked the Supreme Court to not hear the company's appeal to claims that its Roundup weedkiller causes cancer.

TUI AG jumped 4% after the company estimated return to profitability in the current year and Alstom SA declined 6% despite reporting better-than-expected annual profit.   

In Asian markets, the Seoul index declined for the seventh day in a row on the worries that the rising supply chain costs and global inflation will severely cut profit margins of industrial corporations. 

The Nikkei index in Japan declined 0.2% and Toyota Motor declined 4% after the automaker said rising logistics and raw material costs may trim full-year profit by 20%. 

Hong Kong index gained 1% and Shanghai index edged up 0.8% after the release of mixed inflation data and hopes that Beijing will offer more stimulus and virus cases also declined.  

Investors also reviewed the inflation data from China. 

Consumer prices rose 2.1% in April after rising 1.5% in March from a year ago, the National Bureau of Statistics reported. 

Factory prices or producer price index rose at a slower pace of 8% after rising at 8.3%. The producer prices are expected to slow down in the coming months reflecting weak demand. 

Stocks in India lacked direction for the third week in a row and two leading indexes closed down. Initial public offerings picked up on the back of steady demand from retail investors.

The Sensex index closed down 0.5% to 54,088.39 and the Nifty index declined 0.45% to 16,167.10.  

Delhivery's 5,235 crore rupees ($730 million) public offering was subscribed 20% on the first day of offer period. 

Venus Pipes & Tubes' 160 crore rupee ($20 million) offering was subscribed two times on the first day of offering. 

Prudent Corporate Advisory Services' offering received 52% interest on the first day of offering.