©Reuters.
Investing.com – European stock markets rose on Wednesday, led by the FTSE 100 index, amid growing optimism that slowing British inflation will prompt the central bank to begin monetary easing relatively early next year.
As of 3:10 a.m. ET (8:10 p.m. Japan time), German stocks were up 0.2%, French stocks were up 0.3% and British stocks were up 1.5%.
UK inflation slows sharply in November
Data released early Wednesday showed Britain’s annual rate of return was much better than expected in November, falling to 3.9% from 4.6% in October, the lowest level since September 2021.
The key core annual figure, which excludes volatile food and energy prices, also unexpectedly fell sharply, falling from 5.7% to 5.1%.
The central bank left key interest rates unchanged at last week’s meeting, but stated rates are expected to remain high for “an extended period” as three policymakers continue to advocate further rate hikes.
This rapid progress in bringing inflation levels back to the central bank’s medium-term target of 2% only increases market expectations that officials will agree to cut interest rates in the first half of the new year to support the slowing economy.
German consumer sentiment shows improvement
Germany also fell more than expected, falling 0.5% month-on-month in November and 7.9% for the year, data from early Wednesday showed.
This reduction in ex-factory prices is expected to contribute to an improvement in German consumer sentiment as the new year begins, although it is clearly at a very low level, according to a survey carried out on Wednesday by the GfK Institute. .
The outlook for January is -25.1 points, up from the previous month’s revised -27.6, beating expectations of -27.0 points.
Rates remained unchanged last week, with President Christine Lagarde rejecting any dovish hints of a change in policy, but on Tuesday it was confirmed that interest rates would be 2.4% annualized in November, the central bank’s target of 2. It wasn’t far from %.
Investors therefore expect the ECB to cut interest rates several times next year, with the first move likely to occur in the first quarter.
Petrofac soars on solid outlook
In corporate news, shares in Petrofac (LON:) soared after the oilfield services company said its outlook was solid, supported by solid orders. This includes a second $14 billion contract award for six projects worth approximately $1.4 billion with Dutch transmission system operator TenneT.
Crude oil stabilization after increase in US inventories
Oil prices stabilized on Wednesday as traders digested an unexpected increase in stockpiles while monitoring the volatile geopolitical situation in the Red Sea.
By 3:10 a.m. ET, U.S. crude oil futures were trading 0.6% higher at $74.42 per barrel, with the contract up 0.5% at $79.64 per barrel.
Crude oil has fallen this week as oil and shipping companies announced plans to bypass the Suez Canal as attacks on ships in the Red Sea by Yemen-backed Houthis could disrupt oil supplies to the canal. Prices have rebounded sharply from their lowest levels in about five months. Important Asian market.
But the gains solidified after statistics showed U.S. crude inventories unexpectedly rose by 900,000 barrels last week and fell by 2.2 million barrels.
Official readings from the U.S. are expected to be released later Wednesday, but API readings show U.S. production continues at record high levels.
It also rose 0.1% to $2,053.25 an ounce, while trading 0.1% lower at $1.0966.