The ECB Meeting Looms Large; European Stocks Rise
European stock markets rose on Monday, kicking off a crucial week on a positive note as investors anticipate a European Central Bank meeting and the release of significant U.S. inflation data.
By 3:45 a.m. ET (0745 GMT), the DAX in Germany was up 0.7 percent; the CAC 40 in France was up 0.9 percent; moreover, the FTSE 100 in the United Kingdom was up 1.2 percent. Volumes were low due to the United Kingdom’s vacation; however, European shares rebounded Monday after closing the previous week on a sour note. According to data released on Friday, the U.S. economy added a strong 390,000 jobs in May; leading investors to rethink the Federal Reserve’s ability to raise interest rates in the months ahead.
Should You Expect a Policy Change?
This week in Europe, all eyes will be on the European Central Bank’s policy-setting meeting on Thursday; confirming that rate rises are on the way in the third quarter. President Christine Lagarde detailed her strategy to lift rates out of negative territory a few weeks ago; she stated that the ECB’s minus 0.5 percent deposit rate should begin to rise in July; moreover, it might be at zero or “slightly above” by the end of September before increasing further “towards the neutral rate.”
Meanwhile, the battle in Ukraine rages on, with the capital Kyiv targeted by Russian cruise missiles fired from the Caspian Sea, the first such strike in weeks. Assisting with the tone, China’s Caixin services purchasing managers’ index rose to 41.4 in May from 36.2 in April; this indicated a modest rebound for the world’s second-biggest economy as the nation eases COVID-19 restrictions. Across the pond, investors are looking forward to the publication of the May U.S. CPI data on Friday, as it will be a significant factor in the Fed’s decision on how much to raise rates.
Despite the low-cost carrier canceling 80 flights on Sunday due to the continuous hard operating environment, EasyJet (LON: EZJ) stock increased 0.9 percent; benefiting from the positive attitude.