European Stocks Advance
European stocks rose on Wednesday as investors cheered the news of slowing inflation in the UK. The Stoxx Europe 600 Index gained 0.3%, while the UK’s FTSE 100 Index jumped 1.2%.
UK Shares Rally on Slowing Inflation
The UK’s Office for National Statistics reported that the Consumer Prices Index (CPI) rose by 0.5% in June, down from 0.7% in May. This was the lowest rate of inflation since February 2020. The news was welcomed by investors, as it suggests that the Bank of England may not need to raise interest rates anytime soon.
The FTSE 100 Index was the biggest gainer among European markets, with shares of banks, insurers, and oil companies leading the rally. Shares of Royal Bank of Scotland Group Plc rose 4.3%, while shares of BP Plc and Royal Dutch Shell Plc gained 2.3% and 1.7%, respectively.
European Banks Lead the Rally
European banks also rose on the news of slowing inflation. Shares of Deutsche Bank AG rose 1.7%, while shares of UBS Group AG and Credit Suisse Group AG gained 1.3% and 1.2%, respectively.
The banking sector was also boosted by news that the European Central Bank (ECB) is considering a new round of stimulus measures. The ECB is expected to announce its decision on Thursday.
Tech Stocks Lag Behind
Tech stocks, however, lagged behind the broader market. Shares of SAP SE and Infineon Technologies AG fell 0.7% and 0.6%, respectively.
European Markets Mixed
Elsewhere in Europe, the French CAC 40 Index rose 0.2%, while the German DAX Index fell 0.2%. The Spanish IBEX 35 Index was little changed.
European Currencies Mixed
The euro was little changed against the US dollar, trading at 1.14. The British pound rose 0.2% against the US dollar, trading at 1.30.
Outlook
European stocks are likely to remain volatile in the near term as investors await the ECB’s decision on Thursday. Investors will also be keeping an eye on the US Federal Reserve’s policy meeting later this week. The Fed is expected to keep interest rates unchanged, but could signal a shift in its policy stance.