European Shares Rise After Soft U.S. Inflation Data

By Scott Kanowsky 

Investing.com -- European markets moved higher on Thursday, boosted by strong gains on Wall Street overnight after weaker-than-expected U.S. inflation eased the pressure on the U.S. Federal Reserve to aggressively tighten monetary policy.

As of 04:16 ET (08:16 GMT), the pan-European STOXX 600 was up by 0.16% and the CAC 40 in France climbed 0.19%. Germany's DAX traded 0.19% in the red, while the FTSE 100 in the U.K. dropped by 0.07%.

The rally in Europe follows a positive lead from major indices in the U.S., with the blue chip Dow Jones Industrial Average closing up over 500 points, or 1.6%.

These gains stemmed from the headline U.S. consumer price index rising 8.5% year over year in July and was flat compared with June, below the expected increases of 8.7% and 0.2%, raising expectations that the Federal Reserve will hike rates at a slower pace this year.

Investors are now pricing in a 50 basis point hike by the Fed in September, down from earlier expectations of a 75 basis point hike.

The earnings season continued in Europe on Thursday, with Deutsche Telekom AG Na (ETR:DTEGn) in the spotlight after the communications giant lifted its annual outlook for the second time and posted quarterly core profit above estimates on Thursday, supported by an upbeat performance in its U.S. unit T-Mobile. Frankfurt-listed shares in the company rose in early dealmaking.

Siemens (ETR:SIEGn) reported better-than-expected revenues for its third quarter on Thursday, but a writedown at Siemens Energy pushed the engineering and technology group into the red for the first time in nearly 12 years. Siemens shares dropped by 1.00%.

Daimler Truck Holding AG (ETR:DTGGe) shares also got a lift after the firm reported a hefty rise in second-quarter earnings on strong demand.

In Switzerland, Zurich Insurance Group AG (SIX:ZURN) reported a better-than-expected 25% rise in operating profit to $3.39 billion in the first half, with both its property and casualty and its life businesses outperforming. Shares jumped following the result.

Oil prices edged lower Thursday after a sharp rise in U.S. crude stocks and as concerns over supply disruptions eased.

U.S. crude inventories rose by 5.5 million barrels in the most recent week, according to data from the Energy Information Administration, more than the expected increase of 73,000 barrels.

This is the second straight week of an unexpectedly large rise in U.S. oil stocks, suggesting weakening demand at the world’s largest consumer.

Also weighing was the resumption of flows through a key European pipeline, from Russia along the southern Druzhba network, as a payment dispute was resolved.

By 03:58 ET, U.S. crude futures traded 0.47% lower at $91.50 a barrel, while the Brent contract fell 0.50% to $96.91.

Additionally, gold futures fell 0.59% to $1,802.95/oz, while EUR/USD traded 0.28% higher at 1.0325.