In a positive turn for European equities, shares closed more than 1% higher on Wednesday. This surge followed an in-line inflation reading in the U.S., which bolstered expectations for a potential second rate cut by the Federal Reserve this year.
The pan-European STOXX 600 recorded a 1.3% lift to 515.02 points, marking its most significant intraday gain since September 2024, and ending a three-day losing streak. Notably, the rate-sensitive real estate sector emerged as the top performer, climbing 3.3%, while a 2% rise in financial stocks lent further strength.
Market participants now foresee nearly 40 basis points in rate reductions from the Fed this year, up from prior estimates of about 30 basis points. This sentiment was echoed by Lilian Chovin, head of asset allocation at UK private bank Coutts, who noted the positive influence of controlled U.S. inflation on European markets.
(With inputs from agencies.)
