European equities closed on a positive note on Wednesday, driven by a less-than-anticipated escalation in Eurozone consumer price inflation. The markets were further fueled by statements from Robert Holzmann of the European Central Bank hinting at possible interest rate cuts as early as June. The proposed cuts are based on the prospect that inflation may deteriorate faster than expected, although he warned against advanced pre-emptive measures in comparison to the US Federal Reserve.
Ambiguity surrounding an early interest rate reduction by the Federal Reserve dampened investor sentiment and constrained market highs. In aggregate, the pan-European Stoxx 600 grew by 0.29%. Meanwhile, the UK's FTSE 100 rose by 0.03%, Germany's DAX surged 0.46%, and France's CAC 40 saw a 0.29% uptick, whilst Switzerland's SMI increased 0.19%.
Continuing with other markets in Europe, countries including Austria, Belgium, Denmark, Finland, Netherlands, Norway, Russia, Spain, and Sweden concluded the day on a high note. However, Greece and Turkey closed in a weaker position, whilst Iceland, Poland, and Portugal remained flat.
In regards to the UK market, significant gains were made by Fresnillo, Barclays Group, Standard Chartered, NatWest Group, Glencore, Weir Holdings, Marks & Spencer, DS Smith, Antofagasta and HSBC holdings, all of which gained between 1.5 to 2.5%. Stocks like Auto Trader Group, ICP, Vodafone Group, Rolls-Royce Holdings, Burberry Group, Royal Dutch Shell, Schroders and Melrose Industries also ended notably higher.
On the other hand, BT fell approximately 4.6%. Other decliners include RS Group, Admiral Group, Prudential, Smiths, B&M European Value Retail, Croda International, Unilever, Reckitt Benckiser, Unite Group, Beazley, SSE and British American Tobacco, that lost between 1 and 3.2%.
Looking at the German market, stocks like BMW and Commerzbank saw a near 5% increase. Other stocks like Bayer, Infineon, Volkswagen, Deutsche Bank, Porsche, Covestro, BASF and Deutsche Post gained between 1 to 3%.
In the French market, Saint Gobain, Societe Generale, BNP Paribas, Edenred, Hermes International, Thales, Credit Agricole, Renault and TotalEnergies advanced between 1 and 2.3%, whilst Unibail Rodamco, L’Oreal, and Stellantis ended sharply lower, losing between 1.7 and 2.3%.
Eurostat’s initial estimate revealed that Eurozone inflation experienced a slowdown in March, with the harmonised index of consumer prices registering an increase of 2.4% annually, a pace slower than the 2.6% rise observed in February. Core inflation also fell to 2.9% in March from 3.1% in the previous month. On an unrelated note, data from Eurostat indicated that the Euro area unemployment rate was stable at 6.5% in February, unchanged from January. Similarly, the EU jobless rate remained stable at 6%, comparable to January’s figure.
