European shares rise after positive US inflation data

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European shares rose on Thursday after gains in Asian markets triggered a sell-off in the dollar after a bigger-than-expected fall in US inflation sent Wall Street shares hitting their highest levels in more than a year.

Europe’s region-wide Stoxx 600 rose 0.3 percent in early trade, having climbed 1.5 percent in the previous session – the most since the start of June. France’s CAC 40 added 0.1 percent, while Germany’s DAX and London’s FTSE 100 were steady.

The moves came after annual growth in the US consumer price index slowed from 4 percent in May to 3 percent in June, marking the slowest rate of inflation since March 2021.

Core inflation also fell more than expected, and the data is likely to ease pressure on the Federal Reserve to raise interest rates after a meeting later this month, when analysts still expect a quarter-percentage-point increase in the central bank’s benchmark. growth is expected. Rate.

However, the market-implied probability of an additional rate hike in the autumn fell from one in two before the CPI release to almost one in three.

Steve Englander, head of G10 FX research at Standard Chartered, said: “We suspect the market is more bullish that the Fed will hike again after its July 26 meeting.” He said the latest inflation numbers could prove to be a “game changer”. Dollar. On Wednesday, the US dollar index, which measures the currency against six other currencies, hit its weakest point in 15 months.

Morningstar chief US economist Preston Caldwell said inflation is now showing “broader signs of a slowdown”, which supports his view that the Fed will begin “aggressive” rate cuts next year.

Wall Street’s benchmark S&P 500 rose to its highest level in 15 months after June consumer price data, led by big tech companies. Contracts tracking the index rose 0.3 percent on Thursday ahead of the New York open, while contracts tracking the tech-heavy Nasdaq 100 rose 0.5 percent.

Asian markets rose despite a sharper-than-expected decline in both China’s exports and imports in June. China’s CSI 300 added 1.4 percent, South Korea’s Kospi gained 0.6 percent, while Japan’s Topix gained 1 percent.

Hong Kong’s Hang Seng index rose 2.6 percent, while the Hang Seng Tech index added 3.6 percent after government officials signaled support for the tech sector.