European equities experienced modest gains on Wednesday following a restrained trading session, as investors assessed the latest regional economic indicators and anticipated forthcoming monetary policy announcements from the Federal Reserve later that day and the Bank of England on Thursday.
The Federal Reserve is widely anticipated to reduce the interest rate by 25 basis points, with significant attention on its economic projections and comments from Chair Jerome Powell. Meanwhile, the Bank of England is expected to maintain its current interest rate stance.
The pan-European STOXX 600 index rose by 0.15%. The UK's FTSE 100 crept up by 0.05%, and France's CAC 40 increased by 0.26%, whereas Germany's DAX saw a marginal decline of 0.02%, and Switzerland's SMI fell by 0.87%.
In other European markets, Austria, Belgium, Denmark, Greece, Ireland, the Netherlands, Poland, Russia, Spain, and Sweden closed with gains. Conversely, Finland, Iceland, Norway, Portugal, and Turkey finished lower.
Within the UK market, Melrose Industries advanced nearly 3%. Companies like IAG, British Land, Airtel Africa, Ashtead Group, Informa, Sage Group, HSBC Holdings, JD Sports Fashion, Lloyds Banking Group, IHG, Natwest Group, Berkeley Group Holdings, Standard Chartered, and Rolls-Royce Holdings saw gains ranging from 1% to 2%. In contrast, Entain dropped approximately 2.7%, with Beazley, AstraZeneca, Persimmon, Hiscox, Rio Tinto, and National Grid each declining by 1% to 1.6%.
In Germany, Infineon saw a significant rally of over 2%, while Commerzbank, Volkswagen, Daimler Truck Holding, and Sartorius rose between 1% and 1.7%. However, Symrise, Hannover Rück, Beiersdorf, Henkel, E.ON, and Munich RE posted losses ranging from 1% to 1.7%.
The French market saw a notable rise for Renault, which surged by 5.4% following reports of potential merger discussions between Honda and Nissan. Vivendi advanced around 3.5%, and STMicroElectronics increased by about 2.5%. Companies such as Teleperformance, Legrand, Safran, Schneider Electric, Saint-Gobain, TotalEnergies, Société Générale, and BNP Paribas recorded gains between 0.8% and 2%. Pernod Ricard dipped nearly 3%, while Dassault Systèmes, Edenred, Danone, L'Oréal, Kering, and Veolia ended with minor losses.
Revised data from Eurostat indicated that Eurozone inflation in November grew slightly slower than initially estimated, with the harmonized index of consumer prices increasing 2.2% year-on-year, following a 2% rise in October, and a downward revision from the initial 2.3%. Eurozone construction production rebounded strongly in October, climbing 1% monthly after a 0.3% decline in September—the strongest increase since February 2023.
In the UK, consumer price inflation accelerated as anticipated in November, according to the Office for National Statistics. The consumer price index saw annual growth of 2.6%, up from 2.3% in October, marking inflation's continued presence above the 2% target for the second consecutive month. Core inflation, excluding energy, food, alcohol, and tobacco prices, rose to 3.5% from 3.3%. The CPI for goods reversed a 0.3% decline to show a 0.4% annual rise, while services cost inflation remained steady at 5%.
UK manufacturers anticipate a further significant drop in production over the next three months due to waning demand, as suggested by the latest Industrial Trends Survey from the Confederation of British Industry. In Q4, output volumes saw the steepest decline since August 2020, with the balance falling to -25% from -12% in the preceding quarter. A net 31% of manufacturers predict output will decline again in the quarter leading to March.
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