Shares end higher after roller-coaster

European shares rose, lifted by strong results and German economic data, while US trading was dominated by volatility caused by the latest US inflation numbers.

Data suggesting GDP in Europe’s biggest economy was set to power ahead in 2018 came as Bridgewater Associates was reported to have taken short bets against titans of corporate Germany including Deutsche Bank, Allianz, and BASF.

The pan-European Stoxx 50 index ended up around 1% higher as earnings from companies including Credit Suisse boosted European markets. But signs of an inflation pickup again roiled US financial markets.

In London, strong financials and commodities stocks drove the Ftse 100 higher as investors shrugged off a hotly-anticipated data release showing higher than expected US inflation. The Ftse 100 covered a 100-point range on the day as stocks swung wildly on the US data.

Shares in bottler Coca-Cola HBC were the standout performers, rising 4.8% and sealing their best one-day gain in six months after the company reported a rise in full-year sales. WPP shares gained 3.6%, their best daily gain in 14 months, as more brokers pointed to encouraging signs for the advertising giant which had performed poorly last year. In Dublin, the Iseq Overall index ended slightly higher.

Investors must now judge whether stronger price increases will force the US Federal Reserve to raise rates faster than the market currently anticipates.

“We’re trying to weigh how much each data point is going to matter,” said Kristina Hooper, the chief global market strategist at Invesco. “It’s about building a case for the [Fed’s] FOMC,” she said.

New Fed chairman Jerome Powell suggested earlier this week that the Federal Open Market Committee would forge ahead with gradual US tightening even as it keeps an eye on financial-system risks following the recent equity rout. Chris Beauchamp, chief market analyst at online broker IG, said that the dollar “is still immensely unloved”.

“As a result, the trades of 2017 that worked so well, i.e. buying US equities over their European counterparts, and continuing to push the euro and sterling higher, remain the way to go for those looking for sustained momentum. If fears about a US current account deficit gather pace, there may be an awful lot more downside for the US dollar,” he said.

Meanwhile, South Africa’ rand headed for its strongest level against the dollar in almost three years after the ruling African National Congress said it will remove President Jacob Zuma from office tomorrow through a parliamentary vote of no confidence.

- Bloomberg, Reuters, and Irish Examiner staff