European shares climb on energy boost, rate-cut hopes.
European shares rose on Monday, with investor optimism over interest rate cuts from major central banks back to the fore, while Spanish defence and technology firm Indra jumped following a strong first-quarter profit.
The pan-European STOXX 600.STOXX was up 0.3% as of 0830 GMT. UK equities.FTSE is closed due to a bank holiday.
Supporting sentiment, a media report showed European Central Bank Chief Economist Philip Lane noted a stronger case for a June rate cut on easing services inflation, while Friday’s softer-than-expected U.S. jobs report renewed bets of the Federal Reserve most likely easing rates this year.
“Data is stacking up quite nicely for the ECB, but the situation for the Fed is that they have to wait longer and see how economic data pans out,” said Michael Field, European market strategist, Morningstar.
Energy.SXEP was among the top sectoral gainers as oil prices rose after Saudi Arabia hiked June crude prices for most regions and as prospects of a Gaza ceasefire deal appeared slim.
European stocks have lost some of their shine from the start of the year due to a few uncertainties, including the health of European businesses, the Middle East tensions and the ECB’s policy outlook beyond June.
The STOXX 600 is up around 6% year-to-date, lagging the more than 7% rise in its U.S. benchmark peer S&P 500.SPX, whose rally has also stalled due to uncertainties, including over when the Fed could start cutting rates.
Goldman Sachs raised its 2024 earnings growth forecast for STOXX 600 companies to 6% from 3%, citing higher commodity prices, stickier inflation, a weaker currency and stronger economic growth.
“This earnings season has been mostly along expectations, no huge surprises … But valuations are quite high, so whenever there’s any kind of blip or any bit of information, people are seemingly kind of overanalyzing it,” Morningstar’s Field said.
Indra IDR.MC jumped 7.2% after posting a 40% rise in first-quarter net profit, supported by strong orders as global tensions spur demand for air defences.
Maurel et Prom MAUP.PA rose 8.3% after the French oil group got a specific license for its operations in Venezuela.
Atos ATOS.PA fell 5.2% in volatile trading, with the debt-laden French IT company announcing four investor offers for debt restructuring and cash infusion, saying any restructuring would likely “lead to a massive dilution of existing shareholders”.
Dutch postal firm PostNL PTNL.AS dropped 3.5% after a wider-than-expected first-quarter loss. Germany’s logistics giant Deutsche Post DHLn.DE shed 3.6%.
Danish hearing aid maker Demant A/S DEMANT.CO fell 3.6% after a first-quarter sales miss.