European Stocks Ease Despite UK Inflation Hitting Target; Nvidia Takes Crown as Most Valuable Company

European stock markets experienced a slight decline on Wednesday, even as UK inflation returned to the Bank of England’s target, with trading activity subdued due to a U.S. holiday. The DAX index in Germany dipped 0.2%, the CAC 40 in France also fell 0.2%, and the FTSE 100 in the U.K. saw a slightly larger drop of 0.3%.

UK Inflation Meets Target, Rate Cut Speculation Rises

The UK consumer price index (CPI) registered a 2.0% annual increase in the 12 months to May 2024, aligning with the Bank of England’s target for the first time since July 2021. This positive news, coupled with recent benign U.S. inflation data, has fueled speculation about potential interest rate cuts by the central bank.

While the Bank of England is expected to hold rates steady in its upcoming decision on Thursday, the recent drop in inflation and signs of wage growth have opened the door for the possibility of a rate cut in the near future.

In a significant milestone for the tech industry, Nvidia surpassed Apple and Microsoft to become the world’s most valuable company on Tuesday. Riding the wave of artificial intelligence (AI) advancements, Nvidia’s market cap surged to $3.34 trillion, eclipsing Microsoft’s $3.31 trillion and Apple’s $3.29 trillion.

Other Notable Developments

• Just Eat Takeaway’s stock gained 1.5% following the company’s announcement of a partnership with Amazon to offer Prime members free delivery in Germany, Austria, and Spain.
• Consulting firm EY released a report highlighting the need for Europe to address political instability, reduce red tape, and stabilize energy prices to attract foreign investment and enhance competitiveness.

Crude oil prices experienced a slight decline on Wednesday, driven by concerns over demand following an unexpected build in U.S. crude inventories. Data from the American Petroleum Institute revealed a 2.26 million barrel increase in U.S. crude stocks for the week ending June 14th, contrary to analysts’ expectations of a draw. Official U.S. inventory data from the Energy Information Administration is due on Thursday, providing further insights into the supply-demand balance.

Market Activity Muted by U.S. Holiday

Market activity was generally subdued on Wednesday due to the closure of U.S. financial markets for the Juneteenth holiday. This pause in U.S. trading likely contributed to the muted movements in European stock markets and other asset classes.