European stocks rise, helped by U.K. banking gains; U.S. CPI due

Investing.com - European stock markets traded higher Wednesday, helped by gains in the U.K. banking sector ahead of the release of key U.S. inflation data. 

At 03:50 ET (07:50 GMT), the DAX index in Germany traded 0.5% higher, the CAC 40 in France rose 0.5%, while the FTSE 100 in the U.K. traded 0.6% lower.

European equities traded higher Wednesday, helped by the strong close on Wall Street overnight, as well as strong gains in the heavily-weighed U.K. banking sector following the release of the Bank of England's financial stability report.

The Bank of England said on Wednesday its annual stress test of eight major lenders showed that each could cope with rising interest rates in a stressed environment, and none would need to raise additional capital.

Barclays (LON:BARC), HSBC (LON:HSBA), Standard Chartered (LON:STAN), Lloyds (LON:LLOY) and NatWest Group (LON:NWG) all recorded stock price gains of between 1% and 2%.

Thales to buy Cobham Aerospace

Thales (EPA:TCFP) stock rose 1.5% after the French defence and technology group said it started talks to buy French supplier Cobham Aerospace Communications for $1.1 billion. 

The transaction is expected to generate medium-term double-digit growth per annum for Thales and to have an accretive impact on its margins.

Spanish inflation below ECB target 

Spanish consumer prices rose 1.9% year-on-year in June, below the European Central Bank’s 2% target, suggesting the central bank should be considering ending its rate-hiking cycle.

However, data released Tuesday showed that German inflation rose by 6.4% on an annual basis in June, interrupting a steady decline since the start of the year.

Germany is the largest economy in the eurozone, and the ECB’s series of interest-rate increases still appears to have some way to go. 

U.S. CPI report looms large

However, it's the U.S. inflation numbers which are generating the most attention Wednesday.

Fed policymakers are widely expected to increase interest rates at its next meeting later in the month, after pausing last month, but the U.S. CPI report could offer clues as to how many more hikes are left in the tank.

The headline annual figure is expected to have risen by 3.1% in June, after May's 4% rise, while the core rate is expected to have dropped for a third straight month to 5% from 5.3%. 

Concerns that aggressive tightening to curb inflation will result in the largest economy in the world, and a major growth driver, falling into recession have weighed on global markets this year.

Oil edges higher on demand hopes

Oil prices stabilized Wednesday, as predictions of higher demand balanced out rising U.S. crude stockpiles.

The U.S. EIA released its short-term energy outlook on Tuesday, and projected demand would outpace supply by 100,000 barrels a day in 2023 and by 200,000 barrels a day in 2024.

This comes as major oil producers, Saudi Arabia and Russia, have announced additional output cuts for August, while the U.S. dollar fell to two-month lows, supporting the oil market, on bets that the Federal Reserve was close to ending its rate-hiking cycle.

However, data from the American Petroleum Institute cooled the rally as U.S. crude stockpiles unexpectedly grew by over 2 million barrels in the week to July 7. The official numbers from the Energy Information Administration are due later in the session.

By 03:50 ET, the U.S. crude futures traded 0.2% higher at $74.96 a barrel, while the Brent contract climbed 0.1% to $79.48. 

Additionally, gold futures rose 0.1% to $1,939.25/oz, while EUR/USD traded 0.2% higher at 1.1025.