PARIS (Reuters) – Major European stock markets closed the session on Tuesday on the eve of U.S. inflation, whose further slowdown could justify the imminent end of the Federal Reserve’s rate hike cycle.
In Paris, the CAC 40 rose 1.07% to 7,220.01 points. The UK Footsie rose 0.12% and the German Dax rose 0.75%.
The EuroStoxx 50 index rose 0.71%, the FTSEurofirst 300 0.66% and the Stoxx 600 0.72%.
At the time of the close in Europe, Wall Street was also in the green, with the Dow Jones up 0.4%, the Standard & Poor’s 500 up 0.26% and the Nasdaq Composite up 0.2%.
The US Department of Labor is due to release monthly inflation statistics at 12:30 GMT Wednesday, a much-anticipated meeting to assess the Fed’s monetary policy in the coming months.
Economists polled by Reuters expect consumer price inflation (CPI) to have fallen to 3.1% last month, from 4% in May, and to 5% for the underlying version, from 5.3% previously.
After Friday’s jobs report confirmed the resilience of the US economy, investors raised their expectations for a quarter-point rate hike on July 26. What the Fed will decide for the month of September is much less clear.
Fed Vice Chairman Michael Barr said Monday that he believes the end of the cycle is near, raising hopes that the expected hike this month could be the last.
“There is optimism that the next CPI will be better than expected…which could push the Fed to the sidelines sooner than expected,” said Phil Blancato, CEO of Ladenburg Thalmann. Asset Management.
VALUES IN EUROPE
Luxury groups LVMH and Hermès gained 2.21% and 2% respectively on the prospect that Beijing will speed up its support measures for the Chinese economy, after announcing an extension until the end of 2024 of its aid to the struggling property sector.
Daimler Truck ended with a gain of 2.54% after raising its profit and revenue forecasts on the back of improved supplies.
Leading the Stoxx 600, Kingspan jumped 15.7% as the Irish construction group said it expected a record first-half profit. In the aftermath, Saint-Gobain took 4 per cent.
The prospect of an imminent end to the U.S. rate hike cycle held back the greenback, down 0.11% against a basket of international currencies. Against the Swiss franc, the dollar hit its lowest level since January 2021.
The pound hit a 15-month high against the dollar as stronger-than-expected growth in British wages in May prompted traders to bet on further rate hikes by the Bank of England.
In the bond market, the yield on 10-year government bonds fell slightly below 4%, with the German 10-year closing the day at 2.649%.
The oil market rose nearly 2%, driven by expected August production cuts in Russia and Saudi Arabia and hopes of higher demand in developing countries in the second half of the year.
Brent rises to $79.38 and WTI to $74.78.
(Laetitia Volga, editing by Jean-Stéphane Brosse)
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