Europe: Stocks gain with rates outlook, earnings in focus

EUROPEAN stocks gained on Friday (Oct 11) as investors assessed the impact of hotter-than-expected US inflation data and the third-quarter earnings season kicked off.

The Stoxx Europe 600 Index rose 0.6 per cent to 521.98 at the close in London, with real estate and financial services shares gaining the most and telecom stocks the biggest laggards. 

France’s CAC 40 rose 0.5 per cent after the government unveiled its 2025 budget, which includes higher taxes on businesses, the wealthy and energy.

Data on Thursday showed US inflation rose more than forecast, fueling doubts over the pace of the Federal Reserve’s easing of monetary policy after a large September interest rate cut. 

In Europe, the European Central Bank will speed up cuts over the months ahead to bolster the economy, according to a Bloomberg survey.

“More moderate rate cuts can be expected following the slightly increased CPI data, but this does not result in a fundamental change in the central bank’s strategy and further highs in the markets are still to be expected,” said Guillermo Hernandez Sampere, head of trading at asset manager MPPM. 

In the US, JPMorgan Chase & Co. reported a surprise gain in net interest income, while Wells Fargo & Co. too surpassed profit forecasts. Some of Europe’s largest companies, such as LVMH and ASML Holding NV, report next week.

The main regional index has slipped from its September record level on concerns the Fed will deliver a small rate cut next month or pause its easing. 

Traders face other risks including tensions in the Middle East, the war in Ukraine and the effectiveness of China stimulus measures. The Stoxx 600 has gained 9 per cent this year. BLOOMBERG