European shares gain at open as market awaits US CPI

European stocks started the session on a positive note, with major benchmarks recording modest gains at the opening. Below is a summary of the early moves:

• Eurostoxx +0.6%
• Germany DAX +0.4%
• France CAC 40 +0.5%
• UK FTSE +0.2%
• Spain IBEX +0.5%
• Italy FTSE MIB +0.3%

The gains are broad-based across the region, making for a decent start. This extends the steadier performance from the prior session as market participants take a pause after weeks of rising bond yields and growing fiscal concerns in France.

However, the early gains should not be overemphasized. The key event on Wednesday's schedule is the US consumer price index report for September.

Treasury yields have reached multi-decade highs in recent weeks, keeping inflation as a central topic for investors. The primary worry is that another strong inflation print could strengthen the view that the Federal Reserve will need to keep interest rates "higher for longer", or possibly raise them again before the end of the year.

Later, the main focus of the report is expected to be core inflation, particularly as higher energy prices are anticipated to lift the headline figure.

For European equities, the question now is whether the positive start can be sustained once Treasury yields and overall risk sentiment react to the inflation data.

For the moment, a calmer tone is prevailing. That is mirrored in US futures, where S&P 500 futures are up 0.1% at the start of the session. Nevertheless, the real test for stocks today will occur when the US inflation data is released later.