European shares edge higher after UK inflation rate proves lower than expected

European shares closed higher on Wednesday, with UK stocks in the lead after a faster-than-expected slowdown in British inflation helped to bolster hopes of peaking interest rates and pushed homebuilders higher.

Gains for real estate stocks more than offset declines for mining companies during the session.

Dublin

The Iseq index rose 0.77 per cent in Dublin, as several stocks posted strong gains. Food group Kerry advanced 1.7 per cent to €90.52, building materials giant CRH closed 1.1 per cent higher at €51.78 and real estate investment trust Ires Reit also performed well, surging 4.5 per cent to almost 98 cent amid gains for peers in the UK.

Bank of Ireland added 1.7 per cent to €9.47, while Glanbia was up 2 per cent at €13.77 and insulation-maker Kingspan rose almost 1 per cent to €72.16.

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There were more modest gains for Ryanair, which finished 0.3 per cent higher at €16.50, and packaging group Smurfit Kappa, which closed up 0.6 per cent at €33.94, on what was a largely positive day for Irish stocks.

London

UK stocks closed sharply higher on Wednesday, with homebuilders notching their biggest percentage gain since 2008 after signs of slowing inflation helped to bolster hopes of peaking UK interest rates.

The domestically oriented FTSE 250 index outperformed with a 3.8 per cent jump, its best session in more than eight months, while the exporter-led FTSE 100 rose 1.8 per cent to hit a one-month high.

Homebuilders surged 7 per cent as investors cheered data showing British inflation fell to a more than expected 7.9 per cent in June, its slowest pace in more than a year. Economists were forecasting a rise of 8.2 per cent.

Hargreaves Lansdown surged 8.8 per cent after the investment platform reported higher net new business and assets under administration in the fourth quarter.

Aston Martin Lagonda Global Holdings gained 8.9 per cent after Goldman Sachs upgraded the luxury automaker to “buy” and Severn Trent rose 3.5 per cent after the water supplier said it had a strong start to this financial year.

UK-listed shares of Chilean miner Antofagasta slipped 1.4 per cent after lowering its full-year copper output forecast and Rio Tinto edged 0.3 per cent lower after it flagged concerns about a global economic slowdown.

Europe

The pan-European STOXX 600 index ended up 0.3 per cent, extending gains to the second straight session.

Kering jumped 7.4 per cent on a report that the company is speaking to corporate finance advisers to defend it against potential bidders. The French luxury group extended gains after naming managing director Jean-Francois Palus as Gucci’s new chief executive.

ASML Holding beat second quarter earnings expectations and raised its full-year forecast on strong demand from China. Shares of the Dutch chipmaker were, however, down 1.9 per cent.

US

Wall Street stocks rose as investors looked past weak second-quarter earnings from Goldman Sachs, while taking comfort from strong profits of some of the smaller players in the sector.

Goldman Sachs added 1.6 per cent, even after reporting a bigger-than-expected drop in quarterly profit on the back of a retreat from the Wall Street behemoth’s consumer businesses and declining investment values.

Big US lenders rallied after they said higher interest rates had helped boost profits in the second quarter. Citizens Financial and M & Bank beat Wall Street estimates for second-quarter profit, benefiting from the US Federal Reserve’s rapid rate hikes. Citizens Financial added 5.9 per cent, while M & Bank rose 3 per cent.

Tesla rose 1.7 per cent ahead of results expected after the bell, kicking off the earnings season for megacap growth and technology companies. Results from Netflix and IBM later in the day are also on investors’ radar.

Additional reporting: Reuters