Europe equities hit record high after US inflation data

The pan-European Stoxx 600 finished 1% higher, although it trimmed some gains post the US consumer price data announcement

European equities concluded at an all-time high on Tuesday, with automakers and banks leading the charge, as investors maintained their expectations for a Federal Reserve interest rate cut in June after the release of crucial inflation data.

The pan-European Stoxx 600 finished 1% higher, although it trimmed some gains post the US consumer price data announcement.

In February, headline prices rose notably due to increased petrol and shelter costs, while the annual core figure, excluding volatile food and energy prices, saw the smallest increase since May 2021. Traders remained firm in their belief that the Fed will commence its easing cycle in June.

Market participants could be drawing relief from the slight easing in core inflation, said Stuart Cole, chief economist at Equiti Capital.

The Stoxx 600 has surged to new peaks in 2024 on the anticipation of rate cuts by the European Central Bank in June, following a recent deceleration in eurozone inflation. Germany's DAX index reached a fresh record high after confirming a decrease in domestic inflation to 2.7% in February.

I think the ECB will be going first, said Cole, referring to the timing of the first rate cut.

But I am hesitant regarding the Fed. They are so cautious about getting the inflation argument wrong again, they are naturally bent on being over-cautious, he added.

French blue-chip shares also hit an all-time high, and the UK's FTSE 100 reached its highest level since May 2023.

The European automobile index soared by 2.4%, with Porsche leading the charge with an 11.5% increase as traders showed interest in the stock post the German sportscar maker's results.

Banking stocks, sensitive to interest rates, climbed by 1.9%, marking their largest daily percentage gain in five months.