FX.co ★ European Markets Close Higher As Investors React To Results, Eye Fed Policy

Despite data indicating a rise in eurozone inflation, European stocks closed higher on Wednesday. Investors absorbed a series of positive earnings reports from both U.S. and European companies and anticipated the Federal Reserve's monetary policy announcement and the Bank of England's policy decision later this week.

The pan-European STOXX 600 climbed by 0.8%. Notably, the UK's FTSE 100 rose by 1.13%, Germany's DAX advanced by 0.53%, and France's CAC 40 increased by 0.76%, while Switzerland's SMI gained 0.29%.

Among other European markets, Denmark, Finland, Greece, the Netherlands, Norway, Poland, Portugal, and Sweden closed higher. In contrast, Belgium, Iceland, Spain, and Turkey ended the day lower, while Austria and Russia finished flat.

In the UK market, Antofagasta surged by approximately 4.6%. HSBC Holdings saw a 4% increase after announcing a share buyback of up to $3 billion following a stable first-half profit report. Other notable gainers included ICG, Ashtead Group, Spirax Group, Anglo American Plc, and Glencore, which rose between 3% and 3.5%. Halma also climbed by nearly 3%.

Mining firm Ferrexpo gained 4% after reporting more than a doubling in half-year profits. Other companies such as Shell, Prudential, Fresnill, IMI, Scottish Mortgage, Pershing Square Holdings, Diploma, RightMove, Rio Tinto, 3i Group, Melrose Industries, and Croda International saw increases ranging from 1.8% to 2.7%.

Contrastingly, Intercontinental Hotels Group fell nearly 3%, while GSK, Easyjet, and Convatec Group declined by 2%, 1.8%, and 1.25% respectively.

In Germany, Siemens Energy soared nearly 6%, while Sartorius and Fresenius increased by 4.2% and 3.8%, respectively. Infineon, SAP, Rheinmetall, and Qiagen also ended higher, gaining between 1% and 1.6%. TeamViewer surged over 13% after reiterating its annual revenue guidance following a Q2 revenue beat. Conversely, Siemens Healthineers tumbled 6.5% after missing Q3 sales and earnings forecasts. Adidas ended down 2.2%, and Zalando, Volkswagen, Deutsche Bank, HeidelbergCement, BMW, and Beiersdorf closed lower by 1% to 1.5%.

In France, Teleperformance soared nearly 11%, Legrand rallied approximately 6%, and Airbus gained 4.8% after reporting strong half-year results. Schneider Electric ended 3.25% higher following better-than-expected H1 earnings and an upgraded outlook. Danone gained nearly 2.5% after a better-than-expected rise in Q2 revenue. L'Oreal, Dassault Systèmes, ArcelorMittal, Renault, Saint-Gobain, Edenred, Eurofins Scientific, and Pernod Ricard each posted gains between 1% and 2.5%. However, Accor, BNP Paribas, Kering, Safran, Vinci, Stellantis, and Capgemini ended the day down by 0.6% to 1.3%.

ASML rallied 5.6% following a Reuters report indicating that the Biden administration plans to exempt chip equipment makers from Japan, the Netherlands, and South Korea from upcoming export restrictions.

On the economic front, eurozone inflation slightly increased in July while core inflation remained stable, according to Eurostat flash data. The Harmonized Index of Consumer Prices (HICP) climbed 2.6% year-on-year in July, slightly above the 2.5% increase in June and the forecasted 2.5%.

In Germany, import prices rose for the first time in sixteen months in June, growing at a faster-than-expected pace, as reported by Destatis. Import prices increased by 0.7% year-on-year in June, reversing a 0.4% decline in May and outpacing the expected 0.5% rise. The German jobless rate remained unchanged at 3.4% in June, according to Destatis.

Meanwhile, in France, consumer price inflation slightly edged higher in July due to increased energy costs, as per a provisional estimate from INSEE. However, producer prices declined for the seventh consecutive month in June. The consumer price index went up by 2.3% year-on-year in July, following a 2.2% increase in the previous month. The slight rise in inflation was largely driven by higher energy prices, partially offset by decreases in service and food prices.