European Stocks, Bonds Rise as UK Inflation Slows: Markets Wrap

Published On Jan 15, 2025, 3:45 AM

European stocks and bonds saw a boost after UK inflation decreased unexpectedly to 2.5%, outpacing economists' forecast of 2.6%. This decline raised hopes for a potential interest rate cut by the Bank of England. The Stoxx Europe 600 index rose by 0.4%, and expectations for future consumer inflation reports are influencing market sentiment, especially in light of upcoming US inflation data and corporate earnings announcements.

Stock Forecasts

VGK

Positive

The positive sentiment in European markets due to slowing inflation may continue to attract investors looking for relatively lower-risk equities and bonds, especially in the UK where expectations of monetary easing could enhance market performance.

FEZ

Positive

Given the expectation of further easing in monetary policy from central banks, notably the Bank of England, the overall market environment remains conducive for European equities, potentially benefiting funds focused on this region.

XLP

Positive

With the shift in inflation dynamics and potential impact on interest rates, investors may consider diversifying into sectors that typically perform well in low-rate environments, such as consumer staples and utilities.

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