European shares climbed 1% on Wednesday, buoyed by strong corporate earnings reports and a significant boost from ASML, the Dutch chip equipment manufacturer. The pan-European STOXX 600 index reached a two-week high of 519.42 points, reflecting a 1.5% gain for the month so far.
Shares of ASML surged 6% following a Reuters report suggesting that the company would be exempted from new U.S. restrictions on foreign chip equipment exports to China. This news was well-received by investors, propelling the stock and contributing to the broader market’s positive performance. The regional technology sector also benefited, advancing 2.7% on the day.
In addition to ASML’s gains, the aerospace sector saw a 1% increase, driven by a 4% rise in Airbus shares. Airbus, the world’s largest planemaker, reported its second-quarter results, which contributed to the sector’s upward movement.
The French benchmark CAC 40 index also saw a 1% increase, reflecting the overall positive sentiment in European markets. On the economic front, French inflation accelerated to 2.6% in July, slightly below forecasts. Traders are awaiting the Euro zone’s flash inflation data for July, which is expected to provide insights into the European Central Bank’s (ECB) future policy decisions.
Markets are currently anticipating two additional 25-basis-point rate cuts by the ECB this year, with a 65% probability of a rate cut in September, according to LSEG data. Ben Laidler, head of equity strategy at Bradesco BBI, noted, “The markets are betting on a September rate cut by the ECB. An in-line European inflation number plus the Fed keeping the door open to its first cut in September will solidify those expectations.”
Overall, European markets are navigating a landscape of evolving economic indicators and corporate earnings reports, with a focus on upcoming inflation data and central bank policies.
The strong performance of ASML and other major companies highlights the ongoing resilience and dynamic nature of European markets. The anticipated ECB rate cuts are likely to influence market behavior and economic sentiment in the coming months. Investors are closely monitoring inflation data and central bank decisions as they seek to understand future market trends and opportunities.
hii Aditi Sahu this side..
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