(Bloomberg) -- European stocks rose for a second day as US inflation data strengthened bets on a September interest-rate cut from the Federal Reserve.
The Stoxx 600 was 0.6% higher in London at the close, with bond-proxy real estate and utilities stocks leading gains, while media stocks were the biggest laggards.
Data showed US core CPI for June up 0.1% from May, the smallest advance since August 2021, adding to evidence that inflation has resumed its downward trend. The print followed dovish comments Wednesday by Fed Chair Jerome Powell, who said he believes inflation is receding.
“Today‘s soft inflation print reinforces our view of a September cut from the Fed,” said Patrick Armstrong, chief investment officer at Plurimi Wealth LLP.
The FTSE 100 Index was up 0.4% after data showed the UK economy grew 0.4% month-on-month in May, twice the pace that was expected earlier in the day. France’s CAC 40 gained 0.8% as investors continued to creep back to a market that’s been battered by political turmoil in recent weeks.
Focus now is on the upcoming earnings season, with big banks kicking off US second-quarter results. For Europe, analysts have been revising earnings slightly lower, and some reckon earnings disappointment could be the catalyst for some equity-market softness, especially after France’s election-linked turbulence stalled this year’s rally.
Among single stocks, Danish wind farm operator Orsted AS gained after the inflation data. Earlier, UK utilities including Severn Trent Plc and Pennon Group Plc rose after regulator Ofwat published its long-awaited draft determination. Barry Callebaut AG slumped after reporting results amid concerns over demand for chocolate.
For more on equity markets:
- Investors Are Back to Avoiding Everything China: Taking Stock
- M&A Watch Europe: UK Overhauls Listing Rules, Credit Agricole
- Indivior Has Tough Start After Swapping London for NY: ECM Watch
- US Stock Futures Little Changed; E2open Falls
- Planning Headache: The London Rush
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