European equities climbed Wednesday, supported by strong Wall Street gains overnight, as investors turned their attention to global inflation trends.
By 07:15 GMT, Germany’s DAX index rose 0.5%, France’s CAC 40 advanced 0.4%, and the U.K.’s FTSE 100 added 0.2%.
Inflation Data in Focus
Investor sentiment in Europe received a lift after all three major U.S. indices closed at record highs on Tuesday, fueled by expectations of a Federal Reserve interest rate cut next week. Markets have largely priced in some easing of U.S. monetary policy, but key inflation readings later Wednesday and Thursday could influence whether the Fed opts for the traditional 25-basis-point cut or a larger 50-bps reduction.
The latest U.S. producer price index is due later in the day, preceding Thursday’s more closely watched consumer price index release. Economists anticipate monthly gains of 0.3% across the board, which would push the annual headline CPI to 2.9%, with the core rate expected to remain at 3.1%.
Meanwhile, Chinese data showed consumer prices dropped more than expected in August, as government stimulus struggled to offset persistent deflation, while producer prices declined for a 35th consecutive month.
Political Developments in France
In France, President Emmanuel Macron appointed Sebastien Lecornu as the new prime minister on Tuesday, signaling his commitment to pursuing a minority government that preserves his pro-business reforms. In an unusual move, Macron asked Lecornu to hold discussions with all parliamentary parties to seek compromises on budget and policy matters before forming his cabinet.
French markets will face another test on Friday when Fitch Ratings reviews France’s AA- rating with a negative outlook. Moody’s downgraded the country last year after the previous government fell.
Economic Data Across Europe
Spanish industrial production increased 2.5% year-on-year in July, up from the revised 1.9% in June. Italy is expected to release similar data later Wednesday, with minimal monthly growth projected.
Corporate Highlights
Retailer Inditex reported weaker-than-expected Q2 sales but noted that growth accelerated in August, as it navigates cautious consumer behavior in key markets, including the U.S. Swiss insurer Baloise (TG:BLON) posted a 25.5% rise in net profit for H1 2025, with stronger non-life results and higher investment income offsetting weaker life premiums.
Novo Nordisk (NYSE:NVO), maker of Wegovy, announced a workforce reduction of 9,000 jobs, about 11.5% of its staff, in a restructuring aimed at streamlining operations amid pressure from U.S. rival Eli Lilly. Oracle Corporation (NYSE:ORCL) shares surged after the market close on news that its Oracle Cloud Infrastructure division expects booked revenue to exceed half a trillion dollars, driven by strong demand for its cost-efficient cloud services.
Oil Markets Respond to Geopolitical Tensions
Oil prices rose as geopolitical risks in the Middle East intensified and the possibility of additional restrictions on Russian oil threatened global supply. As of 03:15 ET, Brent crude futures were up 1% at $67.02 a barrel, while U.S. West Texas Intermediate rose 1% to $63.26 a barrel.
Prices jumped in the previous session after Israel targeted Hamas leadership in Doha, prompting concerns over the stability of peace talks, while Reuters reported that President Trump urged the European Union to impose high tariffs on India and China over Russian energy purchases. Trump has already applied 50% tariffs on India and reportedly suggested 100% tariffs on both New Delhi and Beijing. While the move aims to pressure Russia to end its conflict in Ukraine, it could also constrain global supply if major buyers India and China comply, though both nations have signaled limited intention to halt Russian oil imports.
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