European stock markets advance, with bets on an end to BoE and Fed tightening after inflation data

European stock markets were trading higher this Wednesday morning, amid confidence that the monetary tightening cycle has already come to an end in the United States and the United Kingdom, after data indicated a slowdown in inflation in both countries. Solid activity indicators in China also help maintain the benign scenario, despite the European Union’s warning about the risks on the horizon.

At around 9:15 am (Brasília time), the Stoxx 600 index, which brings together the main shares in the region, rose 0.74%, to 455.95 points.

Earlier, the British statistics agency reported that the local consumer price index (CPI) slowed to an annual rate of 4.6% in October, the lowest level in two years. The result brings the island nation closer to the situation seen in the USA, where the CPI also lost strength with an increase of 3.2% last month, as revealed yesterday.

The indicators consolidated bets that both the Federal Reserve (Fed) and the Bank of England (BoE) will keep interest rates unchanged in the coming months. “The market is now looking ahead to the prospect of rate cuts,” explains AJ Bell.

In China, industrial production and retail sales advanced more than expected in October, while the country’s central bank injected more liquidity into the system by keeping the Medium Term Loan Line (MLF) interest rate at 2.5%.

As a result, the 1.1% drop in industrial production in the euro zone in September compared to August was relegated to the background. In its autumn report, the European Union cut its projection for growth in the common currency bloc’s Gross Domestic Product (GDP) in 2023, from 0.8% to 0.6%, and indicated that the monetary restriction framework should continue weighing in the activity.

At the time mentioned above, the London Stock Exchange rose 0.89%, Frankfurt gained 0.61%, Paris advanced 0.47% and Milan increased 0.47%, but Lisbon fell 0.79%. At the exchange rate, the euro fell to US$1.0856 and the pound to US$1.2461.