Europe’s STOXX 600 climbs as upbeat earnings buoy travel and leisure, financial stocks

Europe’s main stocks index rose on Wednesday, boosted by travel and leisure and financial shares, with investors drawing comfort from fresh evidence of moderating inflation in the world’s largest economy that supported an early rate-cut narrative.

The pan-European STOXX 600 closed 0.5% higher, with all the major regional bourses also ending in positive territory.

Data showed U.S. consumer prices rebounded as expected in July, but the trend remained consistent with subsiding inflation, a day after moderating producer price numbers reinforced hopes that the Federal Reserve will cut rates soon.

“The CPI report is a green light for the Fed to cut interest rates at their next decision on September 18,” said Bill Adams, chief economist for Comerica Bank.

Comerica forecasts the Fed to cut the federal funds target by a quarter of a percentage point at each of the next four decisions in September, November and December, and in January 2025. Investors are hoping for the Fed to deliver a rate cut as early as September after fears of a U.S. recession choked global risk assets earlier this month. The travel and leisure sub-index logged its biggest one-day gain of 3%, lifted by a 10.5% surge in Flutter after the world’s largest online betting firm raised its full-year outlook. News of the Irish betting giant entering talks to buy Playtech’s Italian unit Snaitech sent shares of the UK gambling technology firm up 14%.

In the euro zone, data for the second quarter showed the euro zone’s GDP rose by 0.3% quarter-on-quarter, while employment rose by 0.2% quarter-on-quarter.

Further, France’s consumer prices rose 2.7% year-on-year in July, slightly up from the previous month’s preliminary reading.

On the earnings front, Swiss bank UBS jumped 5.3% after posting a quarterly profit double the market forecast.

This, coupled with a near 7% rise in German insurer Talanx after results steered the financials index to a near two-week high.

Straumann climbed 13% after the dental implant maker announced the sale of its DrSmile aligner business and raised its full-year outlook.

Among others, Thyssenkrupp slumped 6.3% after swinging to a quarterly net loss, while Carlsberg dropped 4% after a gloomy outlook for the Chinese market.

Of the STOXX 600 companies that have reported second-quarter earnings, 54.8% exceeded estimates, LSEG data showed, versus the typical beat rate of 54%.

However, keeping gains in check were losses in shares of basic resources.

Utilities were also dragged by a near 6% drop in RWE after the group’s management failed to dispel concerns about a report that it could buy in to a U.S. operator of gas-fired power plants.