European markets close lower as investors digest U.S jobs data; Next rises 7% – CNBC

U.K. equity funds saw record outflows last year, according to funds network Calastone.

Investors sold a record £8.38 billion ($9.95 billion), and every month saw net outflows.

That compared with £2.65 billion in outflows from non-U.K. European funds, £1.17 billion from North American funds and £1 billion from Asia-Pacific funds.

Bright spots were global ESG equity funds, which added £6.35 billion, and emerging market funds, which saw £647 million. Equity income funds also narrowed the extent of recent outflows.

Edward Glyn, head of global markets at Calastone, said central banks’ pivot from floods of cheap money to sharp rate hikes had “turned asset markets upside down.”

“There is a structural bias in the market towards fund inflows as we put money aside in our pensions and ISAs/savings plans, so such large outflows from equity funds in 2022 without a corresponding increase in other asset classes is a very large vote of no-confidence,” he said.

Glyn added that sentiment had improved in recent weeks despite uncertainty around interest rates and economic growth — but that this positivity had not reached U.K.-focused funds due to predictions that the country will suffer the worst recession among major economies.

— Jenni Reid

Russian President Vladimir Putin has ordered a cease fire in Ukraine over Orthodox Christmas, the Kremlin said.

Russian troops must hold fire for 36 hours starting on Jan. 6, the Kremlin said.

Many Orthodox Christians, including those living in Russia and Ukraine, celebrate Christmas on Jan. 6 to 7. The head of the Russian Orthodox Church, called for both sides of the war in Ukraine to observe a Christmas truce, a step dismissed by Kyiv as a cynical trap.

“Taking into account the appeal of His Holiness Patriarch Kirill, I instruct the Minister of Defense of the Russian Federation to introduce a ceasefire regime along the entire line of contact of the parties in Ukraine from 12.00 on January 6, 2023 to 24.00 on January 7, 2023,” Putin said in the order.

— Reuters

British clothing store Next continued to top European stocks in afternoon trade, closely followed by fellow U.K. retailer Watches of Switzerland.

Both companies were up around 7% at 2:30 p.m. London time.

Next, considered a bellwether for the U.K. main street, reported its sales had risen 4.8% in the nine weeks to the end of the year after forecasts of a 2% fall, and upped its profit forecast.

Other retailers, including Boots and B&M, reported stronger than expected profits, providing some optimism as the country enters a predicted long recession.

At the other end of the Stoxx 600 index, publishing and education firm Pearson fell 6.1% following a downgrade of its stock by Bank of America analysts to “underperform.”

— Jenni Reid

Inflation in Italy was 12.3% year-on-year in December, down from 12.6% the previous month. The figures are harmonized across the euro zone.

It follows France, Germany and Spain all reporting slowdowns in their annual rate of inflation over the last week, largely fueled by a drop in energy bills due to government support plans and caps.

However, inflation of regulated energy products in Italy jumped from 57.9% to 70.3%.

A flash estimate for inflation across the euro zone is due Friday morning.

Analysts have warned it may be too soon to say inflation has peaked since markets such as energy and food remain volatile.

— Jenni Reid

German exports fell in November in the face of high inflation and market uncertainty, despite growth forecasts.

Exports fell 0.3% compared with the previous month, according to the federal statistics office. Reuters polling had predicted 0.2% growth.

Imports also experienced a larger-than-expected drop of 3.3% in November, after analysts estimated a dip of 0.5%.

Germany published lower-than-expected inflation figures for December Tuesday, down to 9.6% year on year. 

— Hannah Ward-Glenton

The U.K. fashion retailer Next topped the pan-European Stoxx 600 Thursday following a promising pre-tax profit forecast.

The clothing and home products store jumped 6.4% to hit its highest point since mid-August.

— Hannah Ward-Glenton

Oil prices climbed more than 1% after seeing two days of declines, as China’s reopening added optimism for an economic rebound and support in demand.

Brent crude futures rose 1.08% to $78.68 a barrel, while the U.S. West Texas Intermediate futures gained 1.19% to $73.71 a barrel.

Investors appeared to have shrugged off concerns of a potential global recession dogged by shaky economic growth prospects of U.S. and China, leading to a more than 9% slump in oil prices in the past two days.

– Lee Ying Shan

Citi is bearish on lithium — at least for the near future. Lithium is a critical component of electric vehicle batteries.

But the bank remains bullish on its long-term outlook, and names three stocks to watch.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Bank of America sees a 50% upside in the shares of a global fertilizer maker due to a worldwide shortage.

The Wall Street bank says the company commands a 55% profit margin as it is insulated from the rise in natural gas prices.

CNBC Pro subscribers can read more here.

— Ganesh Rao

European markets are heading for a positive open at the start of the new trading week.

The U.K.’s FTSE 100 index is expected to open 24 points higher at 7,723, Germany’s DAX 79 points higher at 14,689, France’s CAC up 32 points at 6,893 and Italy’s FTSE MIB up 91 points at 24,271, according to data from IG.

Data releases Thursday include the euro zone unemployment rate for November, French trade data for November and German industrial production for the same month.

— Holly Ellyatt