European markets opened mixed on Thursday, September 14 2023, as investors awaited the European Central Bank's (ECB) upcoming rate decision, with the central bank expected to maintain steady rates due to a faster-than-anticipated deceleration in euro area economic activity. This comes after European stock markets closed slightly lower on Wednesday in response to stronger than expected U.S. inflation data.
The U.S. Department of Labor reported on Wednesday that the consumer price index rose 3.7% from a year ago, surpassing Dow Jones economists' forecast of a 3.6% increase. On a monthly basis, prices increased by 0.6%, aligning with expectations. The core consumer price index, excluding food and energy, rose by 0.3% on the month and 4.3% annually, with the latter figure matching Dow Jones' predictions.
In company news, Arm Holdings, a British chip design firm taken private by SoftBank (TYO:9984) in 2016, began trading in New York for the first time on Thursday. The initial public offering (IPO) is expected to value Arm at up to $54.5 billion, with shares priced at $51 each. The company plans to list at least 95.5 million American depository shares on Nasdaq, while SoftBank will retain control of approximately 90% of Arm's outstanding shares.
However, SoftBank's shares slipped slightly on Thursday following Arm's IPO pricing announcement, falling as much as 2.17% during the morning session before recovering some losses later in the day. Analysts have expressed both optimism and caution regarding Arm's growth prospects and valuation.
Meanwhile, European carmakers experienced a downturn after Beijing criticized Brussels' decision to investigate electric vehicle subsidies on Wednesday. German giants BMW (ETR:BMWG), Volkswagen (ETR:VOWG_p), Mercedes and Stellantis (NYSE:STLA) all saw their shares drop between 1% and 2%.
In commodities, Brent crude futures have surged by 30% in the last three months to $92.32 a barrel in London, as Saudi Arabia and Russia extend production cuts to the end of 2023.
The ECB's upcoming rate decision is a focal point for investors, as the central bank grapples with inflation rates that continue to exceed its 2% target despite nine consecutive rate hikes. Current market expectations anticipate roughly one more ECB hike this year and the first cut around mid-next year. The ECB's deposit rate currently stands at 3.75%.
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