European stocks close higher, euro gains as investors digest ECB hold, U.S. inflation
European stock markets closed higher on Thursday, as investors assessed the latest interest rate decision from the European Central Bank and a key U.S. inflation print.
The pan-European Stoxx 600 index provisionally closed 0.51% higher, keeping it on track for a weekly gain.
Auto stocks reversed earlier losses to close 1.27% higher, led by Stellantis which climbed throughout the afternoon to end the session up 9.18%. CEO Antonio Filosa told Reuters the company will reintroduce models including the Jeep Cherokee and 8-cylinder RAM trucks to reboot cash generation following its recent sales struggles.
Investors also digested U.S. inflation data, which showed consumer prices rose in-line with forecasts at 2.9% year-on-year in August. The monthly reading came in at a 0.4% increase, just above the 0.3% forecast in a Dow Jones poll, while jobs data showed a surprise increase in weekly unemployment compensation filings.
Market bets on an interest rate cut from the Federal Reserve in September were largely unchanged following the print, with CME’s FedWatch tool suggesting around a 90% probability of a quarter-percentage point cut and a 10% chance of a bigger half-point reduction. U.S. stock markets opened higher on Thursday.
Analysts were, meanwhile, divided on whether the ECB could opt for another cut this year, after already dropping its key rate to 2% from 3% in 2025.
In new staff macroeconomic projections, the ECB said its outlook was largely unchanged, with headline inflation forecast to average 2.1% in 2025 and 1.7% in 2026.
Yael Selfin, chief economist at KPMG, said the central bank was keeping the “door open for another cut this year” due to risks to the growth outlook. However, Sylvain Broyer, chief EMEA economist at S&P Global Ratings, said the central bank was “done” with cuts amid sticky services and food inflation.
Source: CNBC
