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Europe Stocks Close Higher After Hitting Two-Month Low; Euro Zone Inflation Lower Than Expected

Manuel Balce Ceneta | AP

This is CNBC's live blog covering European markets.

European stock markets closed higher Thursday amid hopes that the drama over the U.S. debt ceiling was entering its final stages.

The benchmark Stoxx 600 provisionally closed 0.8% higher, pulling away from its lowest level for two months.

Almost all sectors gained, with mining stocks up 2.2% after Chinese factory activity beat expectations. Media stocks and oil and gas stocks rose nearly 2%, respectively, while household goods closed 0.1% lower.

On the data front, investors are analyzing flash euro zone inflation figures, which showed inflation falling more than anticipated. The consumer price index was up 6.1% from the previous year, which was less than the 6.3% anticipated by economists polled by Reuters. Inflation was at 7% in April.

Flash readings this week from Germany, France and Spain all showed slowdowns in price rises, significantly more than expected by analysts. Italian inflation came in higher than forecast but still declined.

The bill to raise the U.S. debt limit and cap government spending passed by 314-117 in the House of Representatives late Wednesday. Lawmakers hope it will now clear the Democratic-controlled Senate within 48 hours, ahead of the June 5 deadline for avoiding a potential default.

It follows weeks of political wrangling that has weighed on markets but not sparked broad panic, with a deal always considered the most likely outcome. U.S. stock futures were slightly lower overnight.

The Stoxx 600 fell 3.19% in May, according to Eikon data, amid uncertainty over the strength of China's economic rebound and shifting rate hike expectations.

May was also notable for a rally in technology stocks. Better-than-expected results from U.S. chipmaker Nvidia briefly sent the company to a $1 trillion valuation and took the Nasdaq Composite index to a 5.8% monthly gain. European tech and key players such as ASM International also saw a boost, with the sector up 6.71% for the month.

Asia-Pacific markets were mostly higher on Thursday, while U.S. markets saw modest gains.

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SBB shares extend losses on consolidation doubts

Shares of Nordic real estate company SBB fell toward the bottom of the pan-European Stoxx 600 index by mid-afternoon, having traded up nearly 4% in morning deals.

The stock price was last seen trading down 4% as investors considered the company's consolidated coverage ratio.

After suffering its worst day ever on Wednesday with a 28% plunge, SBB said the company does meet the consolidated coverage ratio, which is a measure of whether or not a company can service its debt.

— Hannah Ward-Glenton

U.S. markets open largely unchanged

The S&P 500 was little changed Thursday after the U.S. House passed a debt ceiling bill in a crucial step to avoid a U.S. default, with the measure now moving it to the Senate.

The broader market index rose just 0.1% along with the Nasdaq Composite. The Dow Jones Industrial Average dropped 137 points, or 0.4%.

— Yun Li

Pantheon: Impact of debt deal on the economy likely modest

Ian Shepherdson, chief U.S. Economist at Pantheon Macroeconomics, goes over the probable impact of the U.S. debt deal on the economy.

Euro zone inflation falls more than expected

Inflation in the euro zone eased more than expected in May, with flash figures showing the bloc's annual headline inflation rate fell to 6.1% in May from 7% in April.

This is the lowest level since February 2022. Economists polled by Reuters had expected a May reading of 6.3%.

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Europe stocks open higher

European stock markets opened higher Thursday after falling to a near nine-week low in the previous session.

The pan-European Stoxx 600 index was up 0.9% at 8:40 a.m. London time, with gains across all sectors bar utilities. Media stocks climbed 1.56% as oil and gas rose 1.4%.

Germany's DAX was up 0.8% while France's CAC 40 and the U.K.'s FTSE 100 gained 0.7% and 0.5%, respectively.

— Jenni Reid

UK house prices slip in May, soft landing likely: Lender Nationwide

Residential houses in London.
Bloomberg via Getty Images
Residential houses in London.

U.K. house prices dipped 0.1% in May on a monthly basis, according to the Nationwide House Price Index, as annual price growth fell to -3.4% from -2.7%. The change was minimal when accounting for seasonal effects, lender Nationwide said.

"Recent Bank of England data had shown some signs of recovery in housing market activity, although the number of mortgages approved for house purchase in March was still around 20% below pre-pandemic levels," said Robert Gardner, Nationwide's chief economist.

Gardner said the market would face short-term headwinds as money markets price in a peak rate from the Bank of England of up to 5.5% from the current 4.5%, but that a "relatively soft landing" remained likely given solid labor market conditions and household balance sheets.

— Jenni Reid

CNBC Pro: These 2 stocks have raised dividends above the inflation rate every year — for 40 years

Only two U.S.-listed companies have raised dividends every year above the rate of inflation for the past four decades, according to a CNBC Pro analysis.

When companies increase their payout rates faster than inflation, it enables shareholders' investment returns to keep up and enhance purchasing power throughout the investment period.

CNBC screened about 100,000 stocks worldwide to narrow down the analysis using FactSet data.

CNBC Pro subscribers can read more here.

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European markets: Here are the opening calls

European markets are seen opening higher Thursday, according to data from IG.

The U.K.'s FTSE 100 was set to open 25 points higher at 7,463; Germany's DAX 92 points higher at 15,728.8; France's CAC 54 points higher at 7,139; and Italy's MIB up 106 points to 26,199.

— Jenni Reid

CNBC Pro: BofA names 4 stocks to tap the world's largest EV market — and says one has 71% upside

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The bank shares tips on how investors can position themselves in China's EV market, including stock picks.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Fed's Harker says he supports a rate hike pause

Philadelphia Fed President Patrick Harker said Wednesday that he's leaning toward not raising rates at the central bank's June meeting.

"I am in the camp increasingly coming into this meeting thinking that we really should skip," Harker said. To be sure, he added that Friday's jobs report could change his mind. Following those comments, the CME Group's FedWatch tool showed only a 24% chance of the Fed raising rates.

— Fred Imbert

Dollar index reaches highest levels since March

The dollar index reached a fresh high of 104.361 Wednesday morning, marking its highest level since March 16. It pulled back slightly to 104.28 as of 9:52 a.m. ET.

The index, which weighs the U.S. greenback against a basket of currencies, is up 2.73% month to date, putting it on pace for its best month since September 2022, when it rose 3.14%.

— Hakyung Kim

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