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European shares advanced on Wednesday, fueled by gains in mining and technology stocks, as investors eagerly awaited the release of crucial U.S. inflation data and the outcome of the French elections later in the week.
The pan-European STOXX 600 index rose 0.4% by mid-morning, with the technology sector leading the charge with a 1.4% increase, mirroring the overnight rally on Wall Street. Industrial stocks also gained 0.7%, buoyed by Germany’s DHL, which surged 2.1% after its U.S. counterpart FedEx forecast higher profits for fiscal 2025.
The basic resources sector added 1.2% on the back of elevated metal prices, while the automotive sector bucked the trend, slipping 0.4%. Europe’s largest carmaker Volkswagen declined nearly 1% after announcing a $5 billion investment in a joint venture with electric vehicle manufacturer Rivian.
Investors are keenly focused on the upcoming U.S. personal consumption expenditures (PCE) reading, due on Friday. This key inflation indicator could significantly influence the Federal Reserve’s interest rate decisions. Analysts predict that the Fed will maintain a cautious stance, waiting for a sustained trend of low inflation before considering any rate cuts.
In addition to the U.S. inflation data, consumer price data from France, Spain, and Italy are also expected this week, along with the first round of French parliamentary elections. France’s benchmark CAC 40 index rose 0.3% in anticipation of these events.
Individual stocks also saw significant movement. Alfen, a Dutch energy storage and EV infrastructure provider, plunged 41.6% after issuing a profit warning. Meanwhile, UK’s Deliveroo jumped 3.8% following a Reuters report suggesting that U.S. meal delivery group Doordash had expressed interest in a takeover.
Danske Bank, a Danish lender, rose 1% after raising its net profit forecast for 2024, adding to the positive sentiment in the financial sector.
Overall, European markets are navigating a complex landscape, with investors carefully balancing optimism about the economic recovery with concerns about inflation and potential policy shifts. The upcoming U.S. inflation data and French elections are expected to provide further clarity and potentially reshape market sentiment in the days ahead.
