European stocks saw a positive close on Thursday, buoyed by data indicating a reduction in U.S. consumer price inflation for June, fueling speculation about a potential Federal Reserve interest rate cut in September.
The U.S. Labor Department reported a 0.1% decline in the consumer price index (CPI) for June, following a stagnant May. Economists had anticipated a 0.1% increase. Core consumer prices, which exclude food and energy, edged up by 0.1% in June, slightly lower than the 0.2% rise in May and below the expected 0.2%.
The annual growth rate of consumer prices also decelerated to 3% in June from 3.3% in May, against economists' expectations of a slowdown to 3.1%. The core CPI growth rate similarly decreased to 3.3% from 3.4%, despite expectations for it to remain steady.
Positive economic indicators from Germany and the U.K. further bolstered the upbeat sentiment in European markets.
The pan-European Stoxx 600 increased by 0.6%. The U.K.'s FTSE 100 gained 0.36%, Germany's DAX rose by 0.69%, France's CAC 40 climbed 0.71%, and Switzerland's SMI advanced 0.86%.
Other European markets including Austria, Belgium, Finland, Greece, Norway, Poland, Portugal, Russia, Spain, Sweden, and Turkey also closed higher, whereas Denmark and Netherlands ended lower, and Iceland was flat.
In the UK market, Severn Trent rose 3.75% following strong early-year performance reports. RightMove and EasyJet saw gains of 3.5% and 3.2%, respectively.
Shares of Schroders, Persimmon, Fresnillo, Sainsbury (J), United Utilities, Kingfisher, Ashtead Group, JD Sports Fashion, Segro, IMI, Marks & Spencer, and Barratt Developments increased by 2% to 3%.
Pennon shares surged 11% after appointing an internal candidate as its new CFO.
On the downside, Vodafone Group, Relx, and DCC dropped by 1.4% to 1.7%. Admiral Group, Darktrace, BP, and M&G also experienced declines.
In Germany, Sartorius rallied 5%. RWE, Vonovia, Merck, Siemens Healthineers, Daimler Truck Holding, Siemens Energy, Adidas, Bayer, HeidelbergCement, E.ON, BMW, Rheinmetall, Qiagen, Siemens, and BASF posted gains between 1% and 3%.
In the French market, Vivendi surged around 5.5%. Saint-Gobain, Teleperformance, Legrand, Kering, Pernod Ricard, LVMH, Edenred, Essilor, Hermes International, Carrefour, Eurofins Scientific, Renault, ArcelorMittal, and Dassault Systemes saw increases ranging from 1% to 3%.
Final data from Destatis confirmed that Germany’s consumer price inflation slightly eased due to lower energy costs, as initially estimated in June, with the CPI rising 2.2%, down from May's 3-month high of 2.4%, consistent with previously published flash data. EU-harmonized inflation also softened to 2.5% from 2.48%.
The U.K. economy retracted more briskly than forecasted in May, driven by widespread growth in services, manufacturing, and construction sectors, according to official data. The Office for National Statistics stated that real GDP grew 0.4% in May after remaining stagnant in April, double the expected 0.2% growth.
The UK housing market remained subdued, with indicators for buyer demand, sales, and prices staying negative, although the near-term sales outlook appeared more positive per a Royal Institution of Chartered Surveyors survey. The net balance for new buyer enquiries improved slightly to -7% in June from -8% in May.
