European stocks advanced on Wednesday, with the DAX edging closer to its previous highs, following a global rally driven by growing expectations of US monetary easing.
Markets responded positively to the latest US consumer price data, which showed a 0.2% monthly rise and an annual rate of 2.7% in July, figures perceived as permitting a Federal Reserve rate cut in September, with markets now pricing in further easing by year-end.
The prospect of a softer policy supported equities worldwide.
The German economy also offered a sense of stability, with July’s CPI confirmed at 0.3% month-on-month and 2.0% annually. This reinforces the ECB’s stance that inflation in the eurozone’s largest economy remains under control.
Among corporate movers and despite a rebound, SAP could remain exposed to the downside after a sharp decline in the prior session amid concerns over AI’s disruptive impact on software firms. Meanwhile, RENK Group beat Q2 expectations, reinforcing the optimistic tone. Similarly, defense firm Rheinmetall rose but could see downside risks ahead of a US-Russia meeting.
Looking ahead, markets will monitor geopolitical developments as peace talks around Eastern Europe progress. While setbacks could weigh on broader equity sentiment, defense stocks may offer downside protection. Conversely, meaningful breakthroughs could further lift overall market optimism.
