European stocks rise on hopes of US Federal Reserve rate cut after inflation data

(MENAFN) European stocks experienced a notable rise on Wednesday, with shares in interest rate-sensitive sectors, such as real estate, seeing a significant jump. This surge was prompted by data indicating a decline in inflation in the United States, fueling optimism that the US Federal Reserve might soon embark on a path of monetary policy easing. The European Stoxx 600 index surged by 1.2 percent at the close, marking its largest single-day percentage increase since January, following three consecutive sessions of decline.

The release of data showing unchanged consumer prices in the United States for May, contrary to expectations, coupled with a decline in core inflation pressures last month, bolstered traders' expectations of potential interest rate cuts by the Federal Reserve by September. Consequently, sectors sensitive to interest rates, such as real estate, led the gains on the index, with a remarkable 2.7 percent increase. Additionally, shares of technology companies surged by 2.4 percent amid growing anticipation of monetary policy easing.

However, not all sectors experienced gains. European automakers, including Volkswagen and BMW, saw their shares decline by approximately 1 percent each amid concerns of potential Chinese retaliation. This concern arose after the European Commission announced its intention to impose duties on electric cars imported from China. Furthermore, shares of German luxury car manufacturer Porsche plummeted by 7.2 percent as it traded ex-dividend.

While European stocks had reached record highs the previous week following the European Central Bank's decision to lower interest rates for the first time in five years, they have since faced downward pressure due to political uncertainties across the continent. Despite these challenges, the latest surge in stocks underscores investors' hopes of monetary policy support amid shifting global economic dynamics. 

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