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European markets close higher as investors monitor inflation, U.S. earnings

Elliot Smith

This is CNBC's live blog covering European markets.

European markets closed higher Friday, building on gains from the previous session to notch their highest level since April 2022.

European markets


The pan-European Stoxx 600 closed up 0.5%, slightly paring earlier gains. Health care stocks added 1.4% to lead the rally while autos dropped 1.7%.

Investors around the world are closely monitoring inflation data for clues to how long and how far monetary policy tightening from central banks will go.

In the U.S. on Thursday, the December consumer price index report was in line with economist expectations for a monthly dip of 0.1% but a 6.5% rise in consumer prices year over year, compared with a 0.1% monthly gain in November and an annual rise of 7.1%.

Federal Reserve Bank of Philadelphia President Ed Harker indicated in a speech Thursday that substantial hikes to interest rates are in the rearview, with inflation seemingly past its peak, suggesting that while the Federal Reserve will need to continue hiking, it could do so in 25 basis point increments at future meetings.

Shares in Asia-Pacific were mostly higher on Friday, though Japan's Nikkei 225 slumped 1.25%, dragged down by a sharp decline for Uniqlo owner Fast Retailing as well as broad weakness in food and electronics stocks.

Meanwhile in the U.S., the stock market is set to end a winning week on a sour note as JPMorgan Chase led a decline in bank shares after it warned a recession was its base case for the year.

Bitcoin to trade in $15,000-$30,000 range in 2023, Coinshares CSO says

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Meltem Demirors, CSO of CoinShares, disucsses her outlook for cryptocurrencies in 2023.

Germany GDP climbed 1.9% in 2022

The German gross domestic product rose 1.9% for the full year 2022, figures published Friday showed.

Ruth Brand, president of the Federal Statistical Office, said Berlin's economy had been impacted by the war in Ukraine, energy price rises, material shortages, delivery bottlenecks, food price inflation and a tight labor market.

"Although these difficult conditions persist, the German economy as a whole managed to perform well in 2022," she said. 

The German GDP was 0.7% higher in 2022 than in 2019, the last year prior to the onset of the Covid-19 pandemic.

— Jenni Reid

G7 oil price cap is working so far: Biden advisor

The Russian oil price cap has so far 'achieved our interest,' Amos Hochstein says
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The Group of Seven's oil price cap scheme intended to limit Russian oil export revenues is working "so far so good," according to Amos Hochstein, special presidential coordinator to President Joe Biden.

"As oil prices have come down, there's no doubt that the price cap has, so far, and there's a long way to go, as we sit today, achieved our interest, which was to have continued supply of oil on the market to support economic growth while limiting the value that oil makes for Putin," he told CNBC's Hadley Gamble in Abu Dhabi on Friday.

Read the full story.

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Fred Kempe, Atlantic Council president and CEO, discusses COP28 and the 2023 energy outlook.

Stocks on the move: Kindred Group down 17%, United Internet up 4%

Shares of Kindred Group plunged more than 17% in early trade to the bottom of the Stoxx 600 after the Maltese-headquartered online gambling company issued a fourth-quarter profit warning.

At the top of the index, shares of Germany's United Internet climbed 4% on reports that its web hosting unit Ionos might begin the IPO process before the end of the month.

- Elliot Smith

UK economy unexpectedly grew 0.1% in November

U.K. GDP grew 0.1% in November, according to data from the Office for National Statistics, defying economist expectations and reducing the likelihood that the economy entered a technical recession in the fourth quarter.

A Reuters poll of economists had forecast a 0.2% contraction amid a bleak overall picture for the British economy.

However, in the three months to the end of November, GDP shrank by 0.3%, indicating that the recession may simply be delayed rather than averted. The Bank of England has projected that the U.K. economy will experience at least a four-quarter recession, its longest on record.

"Today's data can hardly disguise the likelihood that whilst recessionary conditions may be shallow, an economic contraction is underway," said Jeremy Batstone-Carr, European strategist at Raymond James.

"What's more, the effects of the Bank's monetary tightening are still to feed through the economy fully. Together with the corporation tax increase to 25% and the expiration of the tax reduction on new investments, the economy only stands to contract further."

- Elliot Smith

Here are the opening calls

Britain's FTSE 100 is seen around 15 points higher at 7,809, Germany's DAX is expected to gain around 21 points to 15,079 and France's CAC 40 is set to open up by around 15 points at 6,991.

Bank of Korea raises rates, says 2022's fourth-quarter GDP likely to be negative

The Bank of Korea raised interest rates by 25 basis points to 3.5%, marking the highest since December 2008. The move was in line with Reuters' expectations.

"The Board judges that the additional 25 basis points hike is warranted to ensure price stability, as inflation still remains high and is projected to be above the target level for a considerable time," the Bank of Korea wrote in a statement.

Governor Rhee Chang-yong said in a press conference that fourth-quarter GDP for 2022 is likely to be negative, but estimated that 2023's first quarter GDP growth could be better.

"Today's hike marks the end of the BoK's current tightening cycle, but the hurdle for a pivot towards an easing bias remains high," ANZ Research's economist Krystal Tan wrote in a note.

— Lee Ying Shan

CNBC Pro: Want a recession-proof portfolio? Fund manager names two stocks that could fit the bill

Investors looking for recession-proof stocks may want to consider buying shares in a renewable energy producer and a cyber security firm, according to one outperforming fund manager.

Trent Masters of investment management firm Alphinity, who named the stocks, said that while the energy company can raise prices above inflation even during a recession, the cyber security firm will see increased demand for its services this year.

CNBC Pro subscribers can read more here.

— Ganesh Rao