European shares advanced on Wednesday, tracking Wall Street’s overnight strength, as traders shifted focus toward key U.S. and Eurozone inflation releases that could shape monetary policy.

At 03:15 ET (07:15 GMT), Germany’s DAX gained 0.5%, France’s CAC 40 rose 0.4%, and the U.K.’s FTSE 100 climbed 0.2%. The pan-European STOXX 600 added 0.21% to 550.37 points.

Inflation data in spotlight
Investor sentiment was boosted after all three major Wall Street indices closed at record highs on Tuesday, driven by expectations that the Federal Reserve will cut rates at its Sept. 16–17 meeting.

Markets are weighing whether the Fed will opt for a 25 bps cut or a larger 50 bps move, depending on upcoming inflation figures.

• U.S. PPI data is due later Wednesday.
• U.S. CPI data follows on Thursday, with consensus forecasts pointing to a 0.3% monthly rise across the board, which would lift annual CPI to 2.9%, while core CPI is expected to hold steady at 3.1%.

Meanwhile, fresh data from China showed that consumer prices fell more than expected in August, underscoring entrenched deflationary pressures, while producer prices marked their 35th straight monthly decline.

French politics in transition
French President Emmanuel Macron appointed loyalist Sebastien Lecornu as prime minister, a day after Francois Bayrou lost a no-confidence vote.

Unusually, Macron asked Lecornu to seek compromise with all parliamentary forces before forming his cabinet, as France prepares for a crucial Fitch Ratings review on Friday, with its AA- grade carrying a negative outlook.