European Stocks Surge as Inflation Data Sparks Rate Cut Hopes

Europe's STOXX 600 index surged on Thursday, with Germany's DAX closing at a record high, propelled by promising inflation data and robust tech sector performance. German and Spanish inflation rates eased in August, boosting hopes for European Central Bank interest rate cuts. However, Nvidia's quarterly results disappointed some investors.

Europe's STOXX 600 index rose on Thursday, led by tech stocks, after softer inflation data lifted hopes for interest-rate cuts. Germany's DAX closed at a record high as German inflation eased to 2% in August, below the 2.3% forecast by analysts. Spain also saw a larger-than-expected decline in prices, with EU-harmonized inflation hitting 2.4% in August—its slowest pace in a year.

The pan-European STOXX 600 index was up 0.8%, narrowly missing a fresh record-high close, while Germany's DAX climbed 0.7% to a record high. This data strengthened expectations that the European Central Bank might implement rate cuts in September. Russ Mould, investment director at AJ Bell, remarked that the data could give the ECB more leeway in policy adjustments.

The tech sector saw the most gains, jumping 2.2%, despite Nvidia's underwhelming quarterly forecast. European chip stocks like ASM International, STMicroelectronics, and ASML Holding rose significantly. Software giant SAP SE also saw a near 2% rise. Delivery Hero led individual stock gains, soaring 12.2% after reporting stronger-than-expected growth in its second-quarter gross merchandise value and announcing plans for an IPO of its Emirati subsidiary Talabat. French spirit makers also saw gains, buoyed by China's removal of provisional measures on imported brandy.

(With inputs from agencies.)