The pan-European equity index finished at the highest level in more than a month Wednesday, extending gains to a second session in the region amid a weakening euro and a round of well-received corporate results that fostered buying appetite.
What are markets doing?The Stoxx Europe 600 index SXXP, +0.54% rose 0.5% to 387.06, marking its highest close since June 15, according to WSJ Market Data Group.
The U.K.’s FTSE 100 index UKX, +0.65% added 0.7% to 7,676.28, boosted by a sharp fall in the pound GBPUSD, -0.3965% Sterling dropped to $1.3033 from $1.3116 on Tuesday after U.K. inflation data for June missed forecasts.
Germany’s DAX 30 index DAX, +0.82% rallied 0.8% to close at 12,765.94, representing its highest close since June 18, while France’s CAC 40 index PX1, +0.46% picked up 0.5% to end at 5,447.44, also marking its best finishing level since June 18.
The euro EURUSD, -0.0772% fell to $1.1627 from $1.1664 late Tuesday in New York.
What is driving the market?The European indexes were boosted by a slide in the euro and the pound against the dollar. The greenback rallied after Federal Reserve Chairman Jerome Powell in congressional testimony on Tuesday struck an upbeat tone on the U.S. economy and indicated interest rates will continue to go up every three months for now.
Powell addressed U.S. lawmakers again on Wednesday, facing the House Financial Services Committee in the afternoon London time.
Aside from news in the U.S., the pound also weakened on data showing U.K. inflation growth unexpectedly stalled in June. Consumer prices rose 2.4% last month, missing forecasts of a 2.6% reading.
In the eurozone, the final reading for June confirmed headline inflation at 2%.
A round of upbeat earnings reports also helped lift equities. Of the 48 companies in the Stoxx 600 to have reported so far, 67% have beat estimates on sales, but only 36% have beaten on earnings.
What are strategists saying?“European markets are once more taking their lead from the devaluation of their currencies, with stocks gaining ground amid a resurgent dollar,” said Joshua Mahony, market analyst at IG, in a note.
“An underwhelming U.K. inflation release this morning has furthered the questions over whether a rate rise next month is as likely as markets expect. With growing Brexit uncertainty, a slowing wage growth, and a falling rate of core inflation, the idea of a rate rise is no doubt becoming less attractive by the day,” he added.
Which stocks are in focus?Ericsson ERICB, +8.52% ERIC, +9.55% jumped 8.5% after the Swedish telecom equipment maker said it swung to an operating profit in the second quarter.
ASML Holding NV ASML, +8.14% gained 8.1% after the Dutch semiconductor company reported a rise in second-quarter profit and said it expects a strong second half of the year.
BHP Billiton PLC BLT, +2.75% BHP, +1.94% BHP, +3.29% rose 2.8% after the miner reported a rise in iron ore and copper production.
Discount airline EasyJet PLC EZJ, +2.15% climbed 2.2% after the discount airline lifted its full-year profit guidance.
Danske Bank A/S DANSKE, -9.12% tumbled 9.1% after the Danish lender said full-year earnings are expected to be at the lower end of its previous guided range.
Shares of Smiths Group PLC SMIN, -7.00% finished 7% lower after engineering company issued a revenue warning for its medical division.
