PARIS (Reuters) – The major European stock markets ended the session up on Tuesday on the eve of US inflation, whose further deceleration could justify the imminent end of the Federal Reserve’s rate hike cycle.

In Paris, the CAC 40 gained 1.07% to 7,220.01 points. The British Footsie gained 0.12% and the German Dax gained 0.75%.

The EuroStoxx 50 index advanced 0.71%, the FTSEurofirst 300 0.66% and the Stoxx 600 0.72%.

At the time of the close in Europe, Wall Street was also evolving in the green, the Dow Jones gaining 0.4% while the Standard & Poor’s 500 rose 0.26% and the Nasdaq Composite 0.2%.

The US Labor Department is due to publish monthly inflation statistics at 12:30 GMT on Wednesday, a much-awaited meeting to assess the Fed’s monetary policy in the months to come.

Economists polled by Reuters expect consumer price inflation (CPI) to have slowed to 3.1% last month, from 4% in May, and to 5% for the underlying version, from 5.3% previously.

After the jobs report on Friday confirmed the resilience of the US economy, investors raised their expectations of a quarter-point rate hike on July 26. What the Fed will decide for the month of September is much less clear.

Fed Vice Chairman Michael Barr said Monday that he believes the end of the cycle is near, raising hopes that the hike anticipated this month may be the last.

“Optimism reigns that the next CPI will be better than expected…which could push the Fed to the sidelines sooner than expected,” said Phil Blancato, chief executive of Ladenburg Thalmann. Asset Management.

VALUES IN EUROPE

The luxury groups LVMH and Hermès gained 2.21% and 2% respectively on the prospect that Beijing is accelerating its support measures for the Chinese economy, after the announcement of an extension until the end of 2024 of its aid to the struggling real estate sector.

Daimler Truck ended with a gain of 2.54% after raising its profit and revenue forecasts on the back of improved supplies.

Leading the Stoxx 600, Kingspan jumped 15.7% as the Irish construction group said it expected record first-half profit. In its wake, Saint-Gobain took 4%.

EXCHANGES/RATES

The prospect of an imminent end to the cycle of rate hikes in the United States is holding back the dollar, down 0.11% against a basket of international currencies. Against the Swiss franc, the greenback hit its lowest level since January 2021.

The pound hit a 15-month high against the dollar as stronger-than-expected growth in British wages in May led traders to bet on further rate hikes from the Bank of England.

On the bond market, the yield on ten-year Treasuries fell slightly below 4% and the German ten-year closed the day at 2.649%.

OIL

The oil market gained nearly 2%, driven by expected August production cuts in Russia and Saudi Arabia and hopes for higher demand in developing countries in the second half.

Brent rises to $79.38 and WTI to $74.78.

(Laetitia Volga, edited by Jean-Stéphane Brosse)

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