European stocks closed on a bright note on Monday, lifted by optimism about interest rate cuts by the Federal Reserve and the European Central Bank in the foreseeable future, and data showing improvement in Eurozone investor confidence and an acceleration in private sector growth.
The pan European Stoxx 600 climbed 0.53%. Germany’s DAX jumped 0.96%, while France’s CAC 40 ended 0.49% up, while Switzerland’s SMI both ended higher by 0.49%. The London Stock Exchange was closed today for a Bank Holiday.
Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Netherlands, Norway, Poland, Spain and Sweden closed higher.
Iceland, Russia and Turkiye ended weak, while Portugal closed flat.
Media reports quoted European Central Bank Chief Economist Philip Lane as saying that inflation is returning to the target in a timely manner and hence there is a stronger case for June rate cut.
He is one of the six members of the Executive Board of the European Central Bank, along with President Christine Lagarde and Vice President Luis de Guindos.
In economic releases, Eurozone’s PMI services index was finalized at 53.3 in April, marking a notable improvement from March’s 51.5.
The Eurozone Sentix Investor Confidence rose from -5.9 to -3.6 in May, beating expectations for a score of -4.8 and marking the seventh consecutive increase.
Data from Eurostat showed Eurozone producer prices fell 7.8% year-over-year in March, slightly slower than the revised 8.5% decrease in February. Prices were expected to decline by 7.7%.
The euro area private sector growth accelerated to an 11-month high in April driven by the service sector, final survey results from S&P Global showed on Monday.
The HCOB composite output index rose to 51.7 in April from 50.3 in the previous month. The flash estimate was 51.4.
On Friday, data from the Labor Department showed non-farm payroll employment in the U.S. rose by much less than expected in the month of April. The report showed the unemployment rate crept up to 3.9%, and the annual rate of wage growth slowed to 4% in April from 4.1% a month earlier.
In the German market, Zalando, Infineon, Munich RE, Deutsche Bank, Volkswagen, Rhenimetall, Puma, Allianz, Mercedes-Benz, Hannover Rueck, HeidelbergCement, Covestro, Continental, Fresenius Medical Care, Siemens Healthineers, BASF and Porsche gained 1 to 2.5%.
Deutsche Post and RWE declined sharply. Deutsche Post shares dropped after the company reported a wider-than-expected first-quarter loss.
In the French market, Teleperformance rallied more than 5%, continuing to benefit from last week’s update that the company posted better than expected earnings in the first quarter.
WorldLine, AXA, Schneider Electric, ArcelorMittal, Unibail Rodamco, Credit Agricole, TotalEnergies, Airbus Group, Carrefour, Thales, Veolia, Air Liquide, Michelin and Alstom gained 1 to 3%.
Market Analysis
European Stocks Close On Bright Note On Strong Data, Rate Cut Hopes
2024-05-06 17:10:14
