Europe open: Shares jump on hopes of Fed rate cut

(Sharecast News) - European shares opened higher on Wednesday on the back of a strong showing on Wall Street amid rising hopes of a US rate cut next month.

The pan-regional Stoxx 600 was up 0.45% to 550 at 0815 BST with all major bourses following suit.

US shares sparked overnight, with the S&P 500 and the tech-heavy Nasdaq reaching new all-time highs, and Japan's Nikkei also finishing at a record level.

The gains were driven by a smaller-than-expected rise in US inflation, prompting calls for a rate cut in September.

"Yesterday, US inflation data was mixed, but the market reaction was not. Normally, core inflation is the measure the Federal Reserve focuses on when deciding monetary policy. In that context, the market could have reacted by scaling back expectations of a September rate cut," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

"But no - investors instead increased September cut expectations, thinking that imported goods inflation remained lower than feared as companies continued to absorb tariff costs. As a result, the US 2-year yield fell after the data release, the probability of a September cut jumped to 94% from 80% beforehand, and the US dollar slipped back."

In equity news, TUI rose as the tour operator posted better-than-expected results.

Nutrition supplement maker Glanbia surged after lifting full-year guidance.

Reporting by Frank Prenesti for Sharecast.com