European Stocks Close Higher As Geopolitical Concerns, Inflation Worries Fade Slightly

European stocks closed higher on Monday as geopolitical worries, concerns about inflation and interest rate outlook faded a bit.

Fears of a wider Middle East conflict ebbed after Iran and Israel completed ‘measured’ counterattacks that were calibrated to avoid any casualties.

It is now becoming clear that both countries are not interested in an actual war, which could result in further escalation in the conflict.

Worries about inflation and the outlook for interest rates subsided a bit as oil prices continued to decline.

Investors looked ahead to the release of a slew of U.S. economic data and prominent tech earnings this week for directional cues.

The pan European Stoxx climbed 0.6%. The U.K.’s FTSE 100 rallied 1.62%, Germany’s DAX gained 0.7% and France’s CAC 40 ended up by 0.22%, while Switzerland’s SMI settled with a gain of 0.28%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Netherlands, Poland, Portugal, Russia, Spain and Sweden ended higher.

Iceland, Norway and Turkiye drifted lower.

In the UK market, Marks & Spencer climbed about 4.4%. Pershing Square Holdings, Sainsbury (J), Vodafone Group, Ocado Group, Next and HSBC Holdings gained 3 to 4.2%.

Tesco gained more than 3% after launching the first tranche of the £1 billion share buyback it promised at its results.

B&M European Value Retail, AstraZeneca, Rolls-Royce Holdings, BT Group, Imperial Brands, GSK, Coca-Cola HBC, Persimmon, Associated British Foods, Reckitt Benckiser and Legal & General gained 2 to 3%.

Standard Chartered, which fell sharply early on in the session due to an investigation on claims that it breached Iranian sanctions to win clients, recovered as the day progressed and settled modestly higher.

Fresnillo, Antofagasta, ICG, Smith (DS) and Anglo American Plc ended with sharp to moderate losses.

In the German market, Fresenius Medical Care rallied more than 6%. Bayer gained about 4%, while Qiagen, Henkel, MTU Aero Engines, Deutsche Telekom, Fresenius, Siemens Healthineers, BASF, Merck, Allianz, Deutsche Bank and Commerzbank gained 1 to 2.5%.

Zalando, Infineon, RWE, Daimler Truck Holding, Adidas and Heidelberg closed weak.

In Paris, WorldLine spurted more than 7%. Edenred, Teleperformance, Kering, Carrefour, Publicis Groupe, Unibail Rodamco, Orange, Alstom, BNP Paribas, AXA, Sanofi and Credit Agricole ended higher by 1.3 to 3%.

Stellantis tumbled more than 5%. Schneider Electric, L’Oreal, Renault and STMicroElectronics closed weak.

On the economic front, data from Eurostat showed the government deficit to GDP ratio in the euro area dropped slightly in 2023.

The government deficit to GDP came in at 3.6% in 2023, which was down from 3.7% in 2022. However, it remained above the 3% threshold.

On the other hand, the ratio in the EU rose to 3.5% from 3.4%.

Further, data showed that the government debt to GDP dropped to 88.6% at the end of 2023 from 90.8% in 2022. In the EU, debt to GDP slid to 81.7% from 83.4%.