Europe midday: Stocks rise ahead of US inflation data, ECB meeting

11th Sep 2024 11:57

(Sharecast News) - European equity markets advanced on Wednesday morning, with all major indices across the continent attempting to rebound after recent falls, as investors digested a raft of economic data.

Market participants were also looking ahead to a European Central Bank policy meeting on Thursday, at which it is widely expected to cut the deposit rate by 25 basis points.

The Stoxx 600 index was up 0.4% at 509.79 by 1300 in Central Europe, having fallen by 3.3% over the past seven sessions (six of which were in the red).

"There's an air of caution and uncertainty hovering over the markets," said David Morrison, senior market analyst at Trade Nation.

"While some of this is due to today's upcoming [US inflation] release, it's also fair to say that investors have been rattled by last week's sell-off, particularly as it followed on from the panicky slump at the beginning of August."

Economic data in focus

A raft of UK economic data was in focus early on - all of which came in well below forecasts. Industrial production unexpectedly slumped 0.8% in July after a 0.8% gain in June (consensus: +0.3%), while manufacturing production dropped 1.0% following 1.1% growth previously (consensus: +0.2%).

Meanwhile, the UK goods trade deficit widened to £20.0bn in July from £18.9bn in June, surprising economists who expected it to shrink to £18.1bn, while monthly GDP figures showed no growth again in July, missing the 0.2% expansion predicted by the market.

Eyes will now turn to US inflation data out on Wednesday afternoon, which is expected to show that the annual change in the consumer price index slowed to 2.6% in August from 2.9% the month before.

"Today's US CPI report expected to give the Fed the green light for a rate cut next week," said Stephen Innes, managing partner at SPI Asset Management.

Innes added that Tuesday evening's presidential debate, of which Kamala Harris was widely perceived as the winner, adds "more fuel to the fire" for monetary easing. "Harris's policies are viewed as inflation-lite, making rate cuts look even more palatable. And while the race remains wide open, Harris has undeniably gained some traction," he said.

Market movers

Commerzbank shares surged 13% after Italian lender UniCredit took a 9% shareholding in the German bank as the government reduced its stake to 12%. Commerzbank also announced that chief executive Manfred Knof is to step down at the end of next year.

Also in Frankfurt, Covestro was rising on speculation that Abu Dhabi National Oil Company will make a formal offer to acquire the German plastic and chemicals manufacturer for approximately €14.4bn including debt, according to the Financial Times.

London-listed pest-control giant Rentokil Initial dropped 19% after scaling back its profit guidance for the full year following weaker-than-expected summer trading in North America. The company, which had already reduced profit targets in July, said adjusted operating profits would be £50m lower than current expectations.

Also in the UK, Rightmove edged higher after rejecting a £5.6bn takeover proposal from Australian peer REA Group, saying it undervalues the UK property platform's future prospects.

Santander Bank Polska was a heavy faller on the Stoxx 600, declining 8% after parent company Banco Santander sold a 5.2% stake in the Polish subsidiary. Shares in the Spanish bank rose 1%.