European shares rise as cool US inflation data curbs some rate hike fears

Published Wed, Jul 15, 2026 · 06:04 AM

EUROPEAN shares ended higher on Tuesday (Jul 14), as a softer-than-expected US inflation reading tempered some bets on a US Federal Reserve interest rate hike, though escalating US-Iran tensions and elevated crude oil prices kept a lid on gains.

The pan-European Stoxx 600 index closed 0.2 per cent higher at 642.1 points, recouping losses after falling as much as 0.9 per cent earlier in the day.

Basic materials jumped 2.4 per cent, as metal prices rallied against a weaker dollar after data showed US consumer inflation slowed more than expected in June as energy prices retreated.

“Overall, the June data paint a fairly favourable picture of inflation, even if one should not over-interpret a single report. We see this as confirmation of our assessment that inflation has peaked,” Commerzbank economists said in a note.

Traders now see only about a 10 per cent chance of a quarter-percentage-point rate increase at the Fed’s July 28 to 29 meeting, versus 35 per cent before the report. However, odds of at least one 25-basis-point rate hike by year-end remain on the table.

For Europe, traders currently see the European Central Bank hiking rates as early as September amid lingering inflation concerns, according to LSEG-compiled data.

Oil prices trended higher on Tuesday after the US re-imposed a naval blockade on Iran and as renewed attacks between Washington and Teheran heightened concerns over energy flows through the Strait of Hormuz. 

European oil and gas stocks climbed 1.3 per cent tracking higher crude oil prices, while travel and leisure slipped 1.3 per cent. The move is the latest complication that companies and investors will have to consider as they gauge the health of the economy and corporate outlook for the rest of the year, just weeks after a Middle East agreement seemed to end hostilities.

Energy giant BP said it expects stronger oil and gas prices, robust oil trading and higher refining margins to lift second-quarter earnings. Its shares gained 2.3 per cent.

Software-related companies SAP and Capgemini fell 2.8 per cent and 1.6 per cent, respectively, amid global weakness in the software sector after US firm IBM warned the AI boom is squeezing software budgets.

Ericsson dropped 12.6 per cent after the Swedish telecom equipment maker’s quarterly sales slightly missed estimates and it warned of rising component costs.

The US earnings season kicked into high gear on Tuesday, with big bank earnings powering ahead in the second quarter. European banks ended 0.8 per cent higher, while financial services climbed 1.2 per cent. Earnings season in Europe also picks up soon with tech giant ASML’s results later this week which offer clues on the outlook for AI-driven demand.

Among others, Evotec plummeted 24.1 per cent after the drug discovery firm cut its 2026 outlook. Mycronic surged 15.3 per cent after the electronics equipment maker raised its full-year guidance on strong AI demand. REUTERS