Ankika Biswas
(Reuters) – European shares rose on Monday as investor optimism about interest rate cuts by major central banks returned to the fore, while Spanish defense and technology company Indra jumped after a strong first-quarter profit.
The pan-European index was up 0.3% as of 0830 GMT. UK stock markets are closed due to a bank holiday.
Supporting sentiment, a media report showed European Central Bank chief economist Philip Lane flagged a strong case for a June rate cut as services inflation eased, while Friday’s US employment data was softer than expected. reporting the Federal Reserve has resumed rates, likely to cut rates this year. .
“For the ECB, the data is shaping up pretty well, but the situation for the Fed is that they will have to wait longer and see how the economic data turns out,” said Michael Field, European market strategist at Morningstar.
Energy was among the sector’s top gainers as oil prices rose after Saudi Arabia raised June crude prices for most regions and as prospects for a ceasefire in the Gaza Strip appeared weak.
European shares have lost some of their luster since the start of the year due to several uncertainties, including the health of European businesses, tensions in the Middle East and the ECB’s policy outlook beyond June.
The STOXX 600 index is up about 6% year to date, lagging the more than 7% gain of its U.S. peer, whose rally has also been stalled by uncertainty, including when the Fed might start cutting rates.
Goldman Sachs raised its forecast for STOXX 600 earnings growth in 2024 from 3% to 6%, citing higher commodity prices, tighter inflation, a weaker currency and stronger economic growth.
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“This earnings season has largely gone as expected, without any huge surprises… But estimates are quite high, so whenever there’s a miss or piece of information, people seem to overestimate it,” Morningstar’s Field said.
Indra shares jumped 7.2% after reporting a 40% jump in first-quarter net profit, helped by strong orders as global tensions drive demand for air defense products.
Maurel et Prom shares rose 8.3% after the French oil group received a special license for its operations in Venezuela.
Atos shares fell 5.2% in volatile trading as the debt-ridden French IT company announced four investor proposals for a debt restructuring and cash injection, saying any restructuring would likely “result in massive dilution to existing shareholders.”
Shares of Dutch postal company PostNL fell 3.5% after a wider-than-expected loss in the first quarter. German logistics giant Deutsche Post (OTC:) lost 3.6%.
Shares of Danish hearing aid maker Demant A/S fell 3.6% after sales fell in the first quarter.