European markets trade higher as traders assess simmering geopolitical tensions

U.S. Treasury yields were higher on Wednesday as investors considered the geopolitical situation and assessed the latest economic data.

At 2:58 a.m. ET, the yield on the 10-year Treasury was up by over four basis points to 4.4178%. The 2-year Treasury yield was last trading at 4.2932% after rising by more than two basis points.

Yields and prices move in opposite directions and one basis point equals 0.01%.

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— Sophie Kiderlin

The sharp pick-up in U.K. inflation to 2.3% in October on the back of higher energy prices means the Bank of England (BOE) is likely to take a more gradual approach to interest rate cuts, analysts note. They are saying Wednesday that the data likely closes the door on a December cut:

“Services inflation is set to bounce around 5% into the winter, while headline CPI could get close to 3% in January. That reduces the chance of a rate cut in December, but in the spring, we think there is still a good chance the Bank of England will accelerate its easing cycle,” said James Smith, developed markets economist at ING, forecasting a pause at next month’s BOE meeting.

Sanjay Raja, chief U.K. economist at Deutsche Bank Research, remarked that the latest inflation print “won’t be as encouraging for the Bank of England, who have talked up a gradual approach in dialling down restrictive policy.” The central bank, he said, will likely “take a more gradual and cautious path in cutting interest rates. For now, upward pressure in price momentum will rise.”

Kris Hamer, director of insight at the British Retail Consortium, commented that the retail industry needs more help from the government, as it prepares for additional cost pressures as a result of U.K. Budget changes, including increases to employers’ payroll tax and the minimum wage.

“For an industry that already operates on slim margins, these new costs will inevitably lead to higher prices. There is also the risk of job losses and store closures if retailers attempt to limit the impact on their customers. If the government wants to prevent a return to high inflation, it needs to consider mitigating the impact of these costs on retailers,” Hamer said.

— Holly Ellyatt

U.K. inflation picked up sharply to a higher-than-expected 2.3% in October, data from the British Office for National Statistics showed Wednesday.

The hike marks a sharp increase from the 1.7% rise recorded in September and exceeds the 2.2% forecast of economists polled by Reuters.

Core inflation, which excludes energy, food, alcohol and tobacco, came in at 3.3% for the month, up slightly from 3.2% in September.

Read more on the story here: UK inflation rises sharply to 2.3% in October, above expectations

— Karen Gilchrist

Is it time to buy the dip in luxury retailer Burberry‘s shares?

The London-listed fashion house told investors earlier this month that it will refocus on heritage designs and statement pieces as part of sweeping revamp plans to revive its ailing fortunes.

Hedge fund manager David Neuhauser made the case on CNBC’s Squawk Box Europe this week.

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— Ganesh Rao

The outlook for equity markets looks “decent” going into 2025, according to Barclays, as central banks cut interest rates and the global economy remains resilient.

The bank named “overweight-rated stocks in which our analysts have high conviction in 2025 and see value in owning on an individual basis.

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— Amala Balakrishner

European markets are expected to open higher Wednesday.

The U.K.’s FTSE 100 index is expected to open 4 points higher at 8,106, Germany’s DAX up 46 points at 19,108, France’s CAC up 23 points at 7,252 and Italy’s FTSE MIB up 118 points at 33,567, according to data from IG.

Earnings are set to come from Severn Trent and British Land. Data releases include U.K. inflation figures.

— Holly Ellyatt