Europe stocks higher, bond yields ease

by Jonathan Adams

The pan-European STOXX 600 index ended 0.3% higher, in touching distance of an all-time high reached earlier this month

European stocks closed marginally higher on Monday and government bond yields eased, amidst hints of upcoming interest rate cuts by the ECB, though trading activity was thin as some markets were closed.

The pan-European STOXX 600 index ended 0.3% higher, in touching distance of an all-time peak reached earlier this month.

Key policymakers at the European Central Bank said the bank has room to reduce interest rates as inflation slows but must take its time in easing policy, even if the direction is already clear.

It remains to be seen how the data will turn out. However, the environment suggests that inflationary pressure will ease in both the eurozone and the U.S., Rainer Singer, analyst at Erste Group wrote in a note.

The ECB is very likely to cut interest rates in June. The Fed is not yet ready, Singer added.

Government bond yields across the continent eased, with the yield on the benchmark 10-year bund last at 2.547%.

Spotlight this week would be on a reading of May consumer prices for the euro zone due on Friday, while individual inflation numbers from Germany, Spain and France will also be released throughout the week.

The ECB looks set to start easing interest rates in its upcoming meeting next week, with bets showing a more than 90% chance of a rate cut, as per LSEG data.

U.S. inflation data, also due on Friday, could help traders evaluate the timing and numbers of possible rate cuts by the Fed this year.

Most of the major STOXX 600 sectors ended higher, with utilities leading the charge with a 1.1% surge, while automobiles gained nearly 1%.

On the data front, a survey showed German business sentiment stagnated in May, falling short of a forecast for improvement. Germany’s benchmark stock index ended 0.4% higher.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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