European Stocks Close Higher On Strong Economic Data

European stocks closed higher on Wednesday thanks to encouraging data from Germany and the U.K., and on hopes the Federal Reserve will pause its interest rate hikes after data showed a moderation in U.S. consumer price inflation in the month of May.

Data showing a bigger than expected industrial production growth in the Euro area contribute as well to the positive mood in European markets.

The Fed is widely expected to leave interest rates unchanged, traders will pay close attention to the accompanying statement for clues about the outlook for rates.

CME Group’s FedWatch Tool is currently indicating a 97.7 percent chance the Fed will leave rates unchanged today but a 59.1 percent chance of another quarter point rate hike in July.

The European Central Bank, scheduled to announce its monetary policy on Thursday, is widely expected to announce another quarter-point rate hike.

The pan European Stoxx 600 climbed 0.36%. The U.K.’s FTSE 100 edged up 0.1%, Germany’s DAX gained 0.49% and France’s CAC 40 surged 0.52%, while Switzerland’s SMI drifted down 0.43%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Ireland, Netherlands, Poland, Russia and Spain closed higher.

Portugal edged up marginally. Norway, Sweden and Turkiye ended weak, while Iceland settled flat.

In the UK market, Smith & Nephew rallied more than 5%. Anglo American Plc, Antofagasta, CRH, Rio Tinto and Glencore gained 2.25 to 4%.

Admiral Group, Prudential, Smurfit Kappa Group, Ocado Group, B&M European Value Retail, Mondi, Standard Chartered, Ashtead Group and Fresnillo advanced 1 to 2%.

Entain tanked nearly 9%. BT Group, Hargreaves Lansdown, AstraZeneca, RS Group and Reckitt Benckiser lost 1 to 2.7%.

In the German market, Zalando climbed more than 4% and Vonovia surged 3.6%. Symrise, Daimler Truck Holding, Fresenius Medical Care, Continental, Deutsche Post, Mercedes-Benz, Deutsche Telekom, Adidas, Bayer and Infineon gained 1 to 2.2%.

MTU Aero Engines fell 1.7%. Henkel drifted down 1.3%, while Porsche ended nearly 1% down.

In Paris, Renault rallied nearly 4%. Teleperformance surged 2.2% and Vinci gained nearly 2%. Kering, Carrefour, BNP Paribas, L’Oreal, ArcelorMittal, Stellantis, Capgemini, Vivendi, Eurofins Scientific and STMicroElectronics also ended notably higher.

In economic news, Germany’s wholesale prices logged its biggest decline since July 2020 largely due to the sharp fall in mineral oil product prices, figures from Destatis showed. Wholesale prices fell 2.6% on a yearly basis in May, following a 0.5% drop in April.

Eurozone industrial output rebounded in April underpinned by a strong bounce-back in capital goods production, data released by Eurostat showed. Industrial production posted a monthly increase of 1%, as expected, but reversed the revised 3.8% decrease in March.

The UK economy grew in April as declines in production and construction were offset by the services output growth, official data revealed. Real gross domestic product grew 0.2% in April, in contrast to the 0.3% contraction in March, the Office for National Statistics reported. The monthly growth matched economists’ expectations.