Wednesday's opening of European stock markets is anticipated to be positive

Wednesday's opening of European stock markets is anticipated to be positive, building on the significant gains of the previous session as investors processed data indicating a slowdown in U.S. inflation as well as China's economic resilience.

Tuesday saw a rise in the major European equity indices, led by France's CAC 40 up 1.4% and Germany's DAX up 1.8%, as weak U.S. inflation data stoked expectations that the Federal Reserve has completed its cycle of interest rate hikes.

Since Fed members, Chair Jerome Powell among them had recently taken a more aggressive stance against inflation, the unexpected shift in the monthly CPI number in the other direction had a significant impact.

Wednesday is expected to maintain this upbeat mood, aided by encouraging economic data from China.  

Data earlier in the session indicated that retail sales growth exceeded forecasts and China's industrial output grew faster than expected. These developments are positive signs for the second-largest economy in the world and a significant export market for many of the biggest companies in Europe.

Furthermore, earlier on Wednesday, China's central bank injected liquidity into the banking system in an effort to boost the country's weak economic growth by promoting increased lending.

In Europe, the good news kept coming as inflation in Britain dropped significantly in October, albeit primarily as a result of declining energy costs.

The headline annual figure fell below 5% for the first time since 2021, falling to 4.6% from 6.7% in the previous month. The monthly release showed no growth, which is a significant decrease from the 0.5% growth observed in September.

Prior to the release of the most recent U.S. oil inventory data, oil prices increased on Wednesday, supported by signs of slowing U.S. inflation and economic resiliency from China, the world's largest crude importer.

Following a systems upgrade last week, the U.S. Energy Information Administration will release its first oil inventory report in two weeks during the session. The American Petroleum Institute's industry data, which was made public on Tuesday, indicated that weekly inventory builds were slightly over a million barrels.

(Sources: investing.com, reuters.com)