FX.co ★ European Stocks Close On Bright Note On Strong Data, Rate Cut Hopes

European stocks closed significantly higher on Monday. This positive movement is linked to optimism about potential future interest rate cuts by significant entities such as the Federal Reserve and the European Central Bank (ECB). Data indicating improvements in Eurozone investor confidence and accelerated private sector growth also contributed to this uptick.

The pan-European Stoxx 600 experienced a 0.53% increase. Germany's DAX rose by 0.96%, while France's CAC 40 ended 0.49% higher. The Swiss Market Index also increased by 0.49%. Meanwhile, the London Stock Exchange remained closed for a Bank Holiday.

Other European markets, including Austria, Belgium, Denmark, Finland, Greece, Netherlands, Norway, Poland, Spain, and Sweden, also ended the day with higher figures. However, Iceland, Russia, and Turkey saw a downturn, while Portugal's market saw no change.

There are reports that the ECB Chief Economist Philip Lane predicts a return of inflation to target levels, making a stronger argument for a June rate cut. Lane is part of the six-member Executive Board of the ECB, which includes President Christine Lagarde and Vice President Luis de Guindos.

Improved economic indicators also showed promise. The Eurozone's PMI services index for April was finalized at 53.3, marking a significant improvement from March's 51.5. The Eurozone Sentix Investor Confidence index rose to -3.6 in May, exceeding the projected score of -4.8. This is the seventh consecutive increase in this rating.

Data from Eurostat revealed that the Eurozone's producer prices fell by 7.8% year-over-year in March. This drop was slightly less than the revised 8.5% decrease experienced in February, with prices anticipated to decline by 7.7%.

The Eurozone private sector growth also accelerated to an 11-month high in April, primarily driven by the service sector. The HCOB composite output index increased from 50.3 in the preceding month to 51.7 in April.

However, data from the U.S. Labor Department showed a lesser-than-expected increase in non-farm payroll employment for April. The unemployment rate increased slightly to 3.9%, and annual wage growth slowed to 4% in April from 4.1% a month earlier.

In Germany, major companies like Zalando, Infineon, Munich RE, Deutsche Bank, Volkswagen, and others saw gains between 1 to 2.5%. However, Deutsche Post and RWE recorded declines, with Deutsche Post shares dropping after reporting a larger-than-expected loss for the first quarter.

In France, Teleperformance saw a significant gain of over 5%, further benefiting from their update of better-than-expected earnings for the first quarter. Other major companies such as WorldLine, AXA, Schneider Electric, Airbus Group, among others, saw gains between 1 to 3%.