European stocks rise, UK leads on soft inflation
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European markets started Wednesday on a positive note, with shares advancing broadly as bond yields eased ahead of key U.S. inflation data. British stocks outperformed following unexpectedly soft local inflation figures, offering a boost to sentiment.
Pan-European market overview
The STOXX 600 index climbed 0.3% by 08 GMT, poised to break a three-day losing streak. Gains were supported by a mix of easing bond yields and optimism surrounding upcoming U.S. Consumer Price Index (CPI) data.
UK-focused midcap stocks surged, with the FTSE 250 index rising 1.4%. December’s inflation data revealed a slowdown in the annual rate to 2.5%, down from 2.6% in November, with core inflation measures declining more sharply. This unexpectedly soft reading fueled hopes for a more dovish stance from the Bank of England, driving investor appetite for British equities.
The FTSE 100 outperformed its European peers, climbing 0.7% as of the latest update.
Bond yields take a breather
Yields on long-dated European government bonds eased, with the region’s benchmark 10-year bond yield falling to 2.602%. This marked a potential end to a 10-day rising streak, providing relief for rate-sensitive sectors.
Real estate stocks, which are particularly sensitive to interest rate changes, rose by 1.6%. Utilities, often considered bond proxies due to their stable dividends, also gained 1%.
Focus shifts to U.S. inflation data
Investors are closely watching the December CPI report in the United States, set for release later in the day. The data will be a crucial indicator of the Federal Reserve’s monetary policy trajectory, particularly as markets remain wary of inflationary pressures.
Outlook for the day
With easing bond yields and encouraging inflation data out of the UK, European markets appear set for a day of gains. However, the upcoming U.S. CPI report holds the potential to shift sentiment, making it a pivotal moment for global markets.
Pan-European market overview
The STOXX 600 index climbed 0.3% by 08 GMT, poised to break a three-day losing streak. Gains were supported by a mix of easing bond yields and optimism surrounding upcoming U.S. Consumer Price Index (CPI) data.
UK-focused midcap stocks surged, with the FTSE 250 index rising 1.4%. December’s inflation data revealed a slowdown in the annual rate to 2.5%, down from 2.6% in November, with core inflation measures declining more sharply. This unexpectedly soft reading fueled hopes for a more dovish stance from the Bank of England, driving investor appetite for British equities.
The FTSE 100 outperformed its European peers, climbing 0.7% as of the latest update.
Bond yields take a breather
Yields on long-dated European government bonds eased, with the region’s benchmark 10-year bond yield falling to 2.602%. This marked a potential end to a 10-day rising streak, providing relief for rate-sensitive sectors.
Real estate stocks, which are particularly sensitive to interest rate changes, rose by 1.6%. Utilities, often considered bond proxies due to their stable dividends, also gained 1%.
Focus shifts to U.S. inflation data
Investors are closely watching the December CPI report in the United States, set for release later in the day. The data will be a crucial indicator of the Federal Reserve’s monetary policy trajectory, particularly as markets remain wary of inflationary pressures.
Outlook for the day
With easing bond yields and encouraging inflation data out of the UK, European markets appear set for a day of gains. However, the upcoming U.S. CPI report holds the potential to shift sentiment, making it a pivotal moment for global markets.