European Stocks Rise Ahead of US Inflation Data as UK CPI Cools

European stock markets rose on Wednesday, supported by cooling UK inflation data, while investors awaited key US inflation figures. At 03:05 ET (08:05 GMT), Germany’s DAX index climbed 0.3%, France’s CAC 40 gained 0.3%, and the UK’s FTSE 100 surged 0.7%.

Investors focused on upcoming US consumer price index (CPI) data, expected to show a 2.9% annual increase for December and a 0.4% monthly rise. Core inflation is projected to climb 0.3% monthly and 3.3% annually. This report could influence the Federal Reserve’s future rate decisions, as markets anticipate a rate cut no earlier than June following strong US job market data. Despite progress, inflation remains above the Fed’s 2% target.

US producer prices released earlier showed signs of easing inflation, with core measures flat in December. Similarly, UK consumer prices slowed unexpectedly to 2.5% annually in December, down from 2.6% in November, with core inflation declining more sharply. This has raised expectations that the Bank of England could cut interest rates during its February 6 meeting, especially amid fiscal challenges under Chancellor Rachel Reeves.

In corporate news, attention shifts to US fourth-quarter earnings reports, with Citigroup, Goldman Sachs, and JPMorgan Chase expected to deliver strong results fueled by robust dealmaking and trading. In Europe, Experian shares edged higher following a solid third-quarter performance, while British recruiter Hays rose 1.6% despite lowering its first-half profit forecast due to European market weakness.