European stocks rise as bets strengthen on US rate cut

Some analysts reckon earnings disappointment could be the catalyst for some equity-market softness, especially after France’s election-linked turbulence stalled this year’s rally

Fed chairman Jerome Powell believes inflation is receding, as US core consumer price inflation for June rose 0.1% from May, the smallest rise since August 2021. Picture: Susan Walsh/AP

European stocks rose for a second day on Thursday, holding on to earlier gains, as US inflation data strengthened bets on a September interest-rate cut from the Federal Reserve.

The Stoxx 600 was 0.5% in afternoon trading yesterday.

The FTSE 100 Index was mostly flat, ceding earlier gains that were sparked by data showing the UK economy grew 0.4% month-on-month in May, twice the pace that was expected. France’s CAC 40 gained 0.7% as investors continued to creep back to a market that was battered by political turmoil in recent weeks.

Data showed US core consumer price inflation for June up 0.1% from May, the smallest advance since August 2021, adding to evidence that inflation has resumed its downward trend. The data followed dovish comments by Fed chairman 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.

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 believe earnings’ disappointment could be the catalyst for some equity-market softness, especially after France’s election-linked turbulence stalled this year’s rally.

• Bloomberg