European stocks rise after UK CPI release; US inflation due

European stock markets rose Wednesday, as investors digested cooling UK inflation data ahead of the release of highly influential US monthly consumer prices report.

At 06:15 ET (11:15 GMT), the DAX index in Germany climbed 0.8%, the CAC 40 in France gained 0.4% and the FTSE 100 in the UK surged 0.7%. US inflation data looms large 

Investors are tentatively awaiting the release of the latest US consumer price data, later in the session, as this could potentially shift expectations of future monetary policy from the Federal Reserve.

Markets have already pushed out expectations for the next Fed rate cut to June after the unexpectedly strong jobs report earlier this month.

Economists are expecting the December CPI to show a 2.9% year-over-year increase, an increase of 0.4% on a monthly basis, while the core measure, which excludes volatile food and energy components, is expected to rise 0.3% monthly, a 3.3% annual gain.

While the Fed was confident that inflation had moderated enough to start cutting interest rates in September, the pace of annual inflation has remained above the Fed's 2% target.

US producer price data for December was surprisingly tame on Tuesday, with the core measure flat in the month.

Back in Europe, British inflation unexpectedly slowed to an annual rate of 2.5% in December from 2.6% in November, while core measures of inflation fell more sharply.

The Bank of England announces its next interest rate decision on Feb. 6, and this cooling of inflation could persuade the policy makers to cut interest rates again, especially after UK government debt yields recently soared to 16-year highs amid worries about Britain's fiscal health under the leadership of Chancellor Rachel Reeves. US banks in spotlight

In corporate news, the focus will be on US fourth-quarter 2024 earnings, with results from some of the biggest US banks - including Citigroup (NYSE:C ), Goldman Sachs (NYSE:GS ) and JPMorgan Chase (NYSE:JPM ) - due later in the session.

Lenders were expected to report stronger earnings, fueled by robust dealmaking and trading.

Elsewhere, Swiss-based SGS (SIX:SGSN ) stock fell over 5% after it confirmed that it is in preliminary merger talks with Bureau Veritas (EPA:BVI ), a French multinational, to create a testing and certification powerhouse valued at over $30 billion. 

Hays (LON:HAYS ) stock rose 2.4% despite the British recruiter forecasting first-half operating profit below market expectations, citing weakness across Europe, and said it expects conditions to remain subdued in the near term Crude gains after drop in US inventories

Oil prices rose Wednesday, helped by a drop in US crude stockpiles as well as concerns that new sanctions on Russian oil exports will disrupt global supplies. 

By 06:15 ET, the US crude futures (WTI) climbed 0.3% to $76.60 a barrel, while the Brent contract rose 0.2% to $80.05 a barrel.

Prices slipped on Tuesday after the US Energy Information Administration predicted oil would come under pressure over the next two years as supply would outpace demand.

That said, the market has found some support from a drop in crude stockpiles in the US, the world's biggest oil consumer, reported by the American Petroleum Institute late on Tuesday.

Traders also continue to focus on the Russian oil sanctions, amid uncertainty about how much Russian supply will be lost in the global market and whether alternative measures can offset the shortfall.

 

 

Source: Investing.com