European equities opened on uneven ground Wednesday as investors weighed the fallout from the U.S. government shutdown and anticipated fresh inflation data from the eurozone.
At 07:40 GMT, Germany’s DAX slipped 0.4%, France’s CAC 40 fell 0.2%, while the U.K.’s FTSE 100 gained 0.4%. Market participants were cautious, balancing domestic inflation risks with concerns over global growth momentum.
The U.S. shutdown, the nation’s 15th since 1981, began after Congress failed to secure a budget deal. Historically, shutdowns are resolved quickly, but the longest on record—lasting 35 days during President Donald Trump’s term—has set a precedent for protracted disputes. Trump has also threatened deeper federal workforce cuts, compounding risks as 150,000 government employees exit payrolls this week, the largest reduction in 80 years.
Analysts warn such disruptions could weigh heavily on the world’s largest economy, amplifying volatility across European markets.
Eurozone Inflation Data in Focus
Attention in Europe now turns to September’s consumer price index (CPI), expected to show annual inflation rising to 2.2% from 2%. The upside risk grew after German inflation accelerated for a second consecutive month, signaling that the recent disinflationary trend may be ending.
As Germany anchors the eurozone economy, stronger price pressures there could influence the broader CPI figure. The European Central Bank (ECB) recently left rates unchanged, but a hotter-than-expected reading may force policymakers to reconsider the end of their easing cycle.
Key factors driving inflation expectations:
- German CPI rose above forecasts, marking back-to-back monthly gains.
- Eurozone inflation forecast: 2.2% annual rate.
- ECB policy stance remains cautious, awaiting data confirmation.
Corporate and Commodity Shifts
Corporate news further shaped European market sentiment. Novartis shares advanced after the U.S. Food and Drug Administration approved its oral therapy for a chronic inflammatory skin disease. Meanwhile, BMW shares edged lower following a U.S. recall of over 145,000 vehicles linked to starter motor overheating. In the U.K., Greggs stock jumped after strong third-quarter sales reinforced its full-year guidance.
On the commodities front, oil prices steadied after two days of sharp declines. Brent crude rose 0.6% to $66.43 a barrel, while WTI gained 0.6% to $62.76. Traders are watching whether OPEC+ will boost output by as much as 500,000 barrels per day in November, triple October’s increase.
Meanwhile, safe-haven demand pushed gold to record levels. Spot gold reached $2,875.53 an ounce, while December futures climbed to $3,903.45, underlining investor unease over the U.S. political impasse.
