Luxury sector lifts Europe as markets set for U.S. CPI test

investing.com:

By Samuel Indyk and Ankur Banerjee

LONDON (Reuters) — European stock markets rose on Thursday, helped by gains in luxury stocks after China eased some pandemic-era restrictions, while the dollar slipped ahead of U.S. inflation data that could influence the Federal Reserve's policy path.

Economists polled by Reuters expect July U.S. consumer price inflation to rise slightly to an annual 3.3%, while the core rate, which excludes the volatile food and energy segments, is forecast to rise 0.2% in July, for an annual gain of 4.8%.

«We're going to see our first rise in headline inflation after 12 consecutive months of falling prices,» said Ben Laidler, global markets strategist at eToro.

«It will be a test of the goldilocks narrative which has supported the rally, which is that inflation will come down and allow interest rates to fall,» Laidler added.

Markets are pricing in a more than 50% chance that the Fed is done with interest rate hikes this year, the CME FedWatch tool shows, as inflation moderates and the prospect of a soft landing increases.

The pan-European benchmark STOXX 600 rose 0.5%, supported by gains in the luxury sector after China lifted a ban on group tours in the United States and other key markets.

Winners included LVMH, Europe's largest company by market cap, which rose 2%.

France's CAC 40 — which has a high weighting of luxury names — outperformed in Europe, rising 0.9%, while Germany's DAX gained 0.5% and Britain's FTSE 100 was little changed, weighed by a number of large-cap companies going ex-dividend.

Wall Street futures were pointing higher.

CHINA WOES

Asian stocks remained pinned near a two-week low, still reeling from China's slip into deflation and an announcement of a U.S. ban on investments