European Shares Seen Tad Higher Despite Weak China Data

European stocks are seen opening higher on Thursday as weaker-than-expected U.S. inflation data raised hopes that the U.S. Federal Reserve will ‘watch and wait’ after an expected rate hike later this month.

Asian markets followed Wall Street higher on optimism about inflation and China ending its years-long crackdown on the tech industry.

China’s June trade data came in below expectations, raising calls for more stimulus measures from the government.

China’s dollar-denominated exports slumped 12.4 percent year-on-year in June, the most in three years since the onset of the COVID-19 pandemic due to sluggish overseas demand for Chinese goods, official data showed earlier today.

Imports contracted 6.8 percent, denting hopes for a quick economic recovery anytime soon.

The dollar nursed heavy losses and bonds rallied amid expectations that the Fed will pivot to aggressive cutting in 2024.

Gold traded close to one-month high while oil held gains after settling near the highest in two months overnight.

Trading later in the day may be impacted by reaction to U.S. data on producer price inflation and weekly jobless claims.

U.S. stocks rose overnight, Treasury yields fell to a two-week low and the dollar plummeted to its lowest since April 2022, as investors cheered lowest inflation reading in over two years.

Data showed U.S. consumer price inflation rose 3 percent in June, marking their smallest year-on-year increase since March 2021, after 4 percent growth in May. Core inflation also moderated from 5.3 percent to 4.8 percent, easing pressure on the Fed to keep raising interest rates.

The tech-heavy Nasdaq Composite and the S&P 500 gained 1.2 percent and 0.7 percent, respectively to hit their best closing levels in over a year while the Dow edged up 0.3 percent.

European stocks rose sharply on Wednesday as investors reacted to the cooler-than-expected U.S. inflation reading and the Bank of England’s stress test results showing the U.K.’s big lenders would continue to be resilient.

The pan European STOXX 600 surged 1.5 percent to close higher for the fourth straight session.

The German DAX rallied 1.5 percent, France’s CAC 40 climbed 1.6 percent and the U.K.’s FTSE 100 surged 1.8 percent.

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