By Peter Bergman (MoneyAmped.com)
In light of the lackluster economic data released on Thursday, European equities lifted due to the optimistic atmosphere surrounding the possibility of interest rate decreases in the United States. As the general election in the United Kingdom began, London markets saw gains. Polls indicated that the Labour Party may likely win a substantial majority of the seats in the election.
Indices Rise Regardless of Election Results
Over the past week and a half, the STOXX 600 index in Europe has reached a new high, a 0.6% gain from its previous level.
As investors excitedly anticipated the probable magnitude of the majority that the Labour Party may obtain, the FTSE 100 in Britain made a substantial rise of 0.8%. This was due to high levels of anticipation.
It is doubtful that the results of the election in the United Kingdom, which was primarily predicted to be a victory for the Labour Party, will have a big influence unless there is a significant shock or an unexpected conclusion. According to Bas van Geffen, a senior macro analyst at Rabobank, this is because the markets have most likely already considered this.
French stocks surged for a second consecutive day, experiencing a 0.8% increase, as opponents of France’s National Rally (RN) intensified their efforts to thwart the far-right party’s ascent to power.
According to a recent opinion poll, RN is predicted to not achieve an absolute majority in Sunday’s second round of the parliamentary election.
The Possibility of Lower Interest Rates Remains
The sub-index for European lenders, which comprises Societe Generale (OTC:SCGLY) and BNP Paribas (OTC:BNPQY), among others, experienced a boost in response to the news, rising by 1.3% and leading the way in sectoral gains.
Subpar U.S. data bolstered optimism regarding the possibility of Federal Reserve interest rate reductions. Applications for U.S. unemployment benefits rose last week, suggesting a slowdown in the labor market.
Surprisingly, German industrial orders declined in May in Europe, while a separate report revealed a decrease in Swiss inflation last month. These developments have led markets to believe that the central bank may lower interest rates later this year.
“The current news headlines might lead to cautious risk-taking, but the resilience in services and the presence of domestic inflation towards the upper limit of the Swiss National Bank’s target range or higher could be a cause for concern,” strategists at Citigroup observed.
Meanwhile, policymakers at the European Central Bank expressed varying levels of confidence in the future trajectory of inflation. However, some members expressed concerns about the decision to lower interest rates last month, as they were caught off guard by a series of unexpected negative developments. These details were revealed in the minutes of their meeting.
Stock Quotes Have Multidirectional Dynamics
Smith & Nephew (LON:SN) experienced a significant increase of 6.8% following the revelation that activist investor Cevian Capital has acquired a 5% stake in the medical equipment manufacturer.
Pluxee, a company specializing in vouchers and benefits, experienced a significant decline of 9.2% following the release of its third-quarter sales report in Europe. The sales figures fell short of expectations, causing concern among investors.
Ericsson, a Swedish telecommunications equipment manufacturer, saw its stock price decline by 1.2% during the second quarter of 2024. The company reported an additional impairment charge of 11.4 billion Swedish crowns ($1.09 billion).
Trading activity was limited due to a public holiday observed in the United States.
