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European equities extended their gains as inflation data from Spain and German regions showed declines, heightening expectations for a potential rate cut by the European Central Bank and pushing the Stoxx 600 index closer to its all-time high.
The pan-European Stoxx 600 climbed 0.68% to 524.66 early in the session, inching toward its record high of 525.59 set on June 7.
On the economic front, inflation in Spain fell sharply to 2.2% from 2.8%, with regional data from Germany also showing declines. Analysts are optimistic that the upcoming eurozone inflation report could further increase pressure on the ECB to lower rates. Scope Markets analyst Joshua Mahony noted, “Confidence is growing that tomorrow’s headline eurozone report might be a major event, potentially pushing the ECB to cut rates.”
Additionally, the eurozone’s August Economic Sentiment Indicator (ESI) unexpectedly improved, rising to 96.6 from 96 in July, surpassing expectations of no change. The increase was driven by higher confidence in the services, industry, and retail sectors, while consumer and construction confidence remained stable.
In corporate news, French spirits companies saw positive movement after China’s commerce ministry announced it would not impose provisional anti-dumping measures on brandy imports from the European Union. This news led to strong gains for shares of Remy Cointreau (LSE:0MGU) and Pernod Ricard.
Centrica (LSE:CNA), the owner of British Gas, also saw its shares rise as the prospect of a 10% increase in energy bills for consumers this winter loomed.
Conversely, shares in IG Group (LSE:IGG) declined following a report from Jefferies on Wednesday evening. The report indicated that Tastytrade founders Tom Sosnoff and Scott Sheridan had sold 6.5 million shares through a placing with a select group of institutional investors. Tastytrade, which was acquired by IG in 2021, was bought for $1 billion.
