European stocks saw gains on Wednesday as investors closely monitored the UK's spring budget announcements and Federal Reserve Chair Jerome Powell's testimony before Congress. Further attention was given to a host of regional economic data and the impending announcement about the European Central Bank's monetary policy set for Thursday.
The UK's Finance Minister, Jeremy Hunt, disclosed plans for ongoing tax reductions due to slowing inflation. With predictions from the Office for Budget Responsibility suggesting inflation is set to fall under the Bank of England's target in the near future, the country's growth forecast has been revised upwards.
Indicating a positive trading day, the pan-European Stoxx 600 saw an increase of 0.39%. The UK's FTSE 100 grew by 0.43%, Germany's DAX saw a moderate 0.1% increase, and France's CAC 40 increased by 0.28%. Switzerland's SMI also performed well, closing 0.72% higher.
Among other European markets, Austria, Belgium, Greece, the Netherlands, Poland, Portugal, Russia, Spain, and Sweden closed with gains, meanwhile, Denmark, Iceland, and Turkey trailed, and Norway, as well as Finland, ended the day relatively unchanged.
Several UK stocks including Convatec Group, Anglo American Plc, Weir Holdings, Smith & Nephew, Endeavour Mining, LSE, Experian, Tesco, BP, Centrica, B&M European Value Retail, Royal Dutch Shell, and Flutter Entertainment made notable gains ranging from 1.5 to 3.4%. Meanwhile, Fresnillo saw a significant drop of about 4%, with Hikma Pharmaceuticals, Smurfit Kappa Group, Ocado Group, Reckitt Benckiser, Diageo, Coca-Cola, Standard Chartered, Antofagasta, and Admiral experiencing losses ranging from 1 to 2.5%.
In Germany, Symrise, a manufacturer of flavours and fragrances, saw an impressive hike of over 6% after reporting above-expected core profits for 2023.
Federal Reserve Chair Jerome Powell made assertions to the House Financial Services Committee that it would likely be appropriate for the Federal Reserve to consider reducing interest rates at some point this year, however, he stressed the need for officials to have a "greater confidence" about inflation moving steadily towards 2%.
European economic data from Eurostat revealed that Eurozone retail sales marginally increased in January due to food and auto fuel turnover. Conversely, the ifo Institute has downgraded Germany's growth prediction for 2024 due to the impact of higher interest rates and fiscal policies on economic activity.
Finally, Germany's robust export rate saw a monthly increase of 6.3% in January, which exceeded economists' predictions of a 1.5% increase. Additionally, the trade surplus saw an impressive rise to EUR 27.5 billion. However, Germany's construction sector contracted significantly in February, albeit at a decelerated pace compared to the previous month.
