European stocks closed with notable gains on Wednesday as investors shifted their concentration away from the political landscape and made strategic purchases ahead of significant economic reports, including a key U.S. consumer price inflation survey.
The pan-European Stoxx 600 index advanced by 0.91%. The U.K.'s FTSE 100 index rose by 0.66%, while Germany's DAX and France's CAC 40 indices increased by 0.94% and 0.86%, respectively. Switzerland's SMI recorded a jump of 0.95%.
Elsewhere in Europe, markets in Austria, Belgium, Denmark, Finland, the Netherlands, Norway, Portugal, Spain, and Sweden ended on a higher note.
Conversely, markets in Greece, Iceland, Poland, Russia, and Turkey finished weaker.
In the UK market, Endeavour Mining Plc and Fresnillo experienced gains of nearly 4%. Stocks of Entain, Prudential, EasyJet, Centrica, London Metric Property, Schroders, J Sainsbury's, Next, United Utilities, Marks & Spencer, Land Securities, Melrose Industries, Segro, Severn Trent, Kingfisher, and Vodafone Group rose between 2% and 3.3%.
On the downside, Sage Group, WPP, and DS Smith saw declines of 1% to 2%. Barratt Developments fell sharply, citing high mortgage rates and broader economic concerns, which led the housebuilder to revise its home delivery targets for the coming year.
In Germany, Vonovia climbed more than 4%, with Porsche and Bayer gaining approximately 3.7% and 3%, respectively. Other prominent gainers included Adidas, Qiagen, Siemens Energy, BMW, Zalando, Siemens, Daimler Truck Holding, E.ON, Fresenius Medical Care, Mercedes-Benz, RWE, and Infineon.
However, Covestro, BASF, and MTU Aero Engines ended significantly lower. Volkswagen modestly declined after warning of a potential closure of its Brussels site for the Audi luxury brand due to a dwindling demand for high-end electric vehicles.
In France, key performers included Vivendi, Eurofins Scientific, Teleperformance, STMicroelectronics, Stellantis, and Bouygues, which all gained between 2% and 2.6%. Orange, Sanofi, LVMH, Unibail-Rodamco, Safran, Hermes International, Schneider Electric, AXA, Airbus, and Société Générale closed higher by 1% to 1.7%.
Conversely, Publicis Groupe, Michelin, Veolia, Essilor, and TotalEnergies finished in the red.
Federal Reserve Chair Jerome Powell, in his congressional testimony, indicated that further "good data" would bolster the central bank's confidence that inflation is on a sustainable downtrend towards its 2% target, possibly leading to an interest rate cut. He also cautioned against the risk of maintaining elevated interest rates for too long, as it could threaten economic growth.
"In light of the achievements in reducing inflation and cooling the labor market over the past two years, elevated inflation is not the sole risk we face," Powell stated. "Failing to reduce policy restraint sufficiently or timely could undesirably weaken economic activity and employment."
