European Equities Close Higher As Traders Bank On Imminent ECB Rate Cut: What's Driving Markets Monday?

Author: Piero Cingari | May 27, 2024 12:55pm

European equities ended Monday broadly positive, while the U.S. market was closed for the Memorial Day holiday.

Traders maintained an overall positive risk sentiment on European assets, driven by near-total certainty that the European Central Bank (ECB) will deliver a rate cut at its June meeting.

Three key ECB members — chief economist Philip Lane, Finland Central Bank governor Olli Rehn and France Central Bank governor François Villeroy de Galhau — made reassuring statements indicating a rate cut is imminent.

• “A June rate cut is appropriate if the inflation outlook holds,” Lane said.
• “Inflation is converging to our 2% target in a sustained way, making it the right time in June to ease the monetary policy stance and start cutting rates,” Rehn said.
• “Barring a surprise, a June rate cut is a done deal,” Villeroy said.

Traders now almost fully price in a June rate cut and expect a total of 65 basis points in cuts (more than two cuts but less than three) by the end of the year.

The euro, as tracked by the Invesco CurrencyShares Euro Currency Trust (NYSE:FXE), inched 0.1% higher to 1.0840.

Monday’s Performance In Major European Indices

Country	US-Based ETF	Price	1-day %chg
Spain – IBEX 35	iShares MSCI Spain ETF (NYSE:EWP)	11,335	0.79%
Italy – FTSE MIB	iShares MSCI Italy ETF (NYSE:EWI)	34,751	0.75%
France – CAC 40	iShares MSCI France Index Fund (NYSE:EWQ)	8,142	0.62%
EU – Euro Stoxx 50	iShares Europe ETF (NYSE:IEV)	5,065	0.58%
Germany – DAX	Global X Dax Germany ETF (NYSE:DAX)	18,793	0.53%

Monday’s Stock Movers In Europe

Monday’s top performers on the Euro Stoxx 50 index included:

• RWE AG (OTCPK: RWEOY) +2.55%
• Bayer AG (OTCPK: BAYRY) +2.32%
• Volkswagen AG (OTCPK: VWAGY) +1.65%
• Enel Società per Azioni (OTCPK: ENLAY) +1.6%
• Iberdrola S.A. (OTCPK: IBRDY) +1.5%
• Eni S.p.A. (NYSE:E) +1.38%

European pharma giant Novo Nordisk A/S (NYSE:NVO) and France luxury powerhouse LVMH-Moet Hennessy Louis Vuitton (OTCPK: LVMUY) closed 0.9% lower and 0.8% higher, respectively.

Dutch chipmaker firm ASML Holding N.V. (NASDAQ:ASML) closed 0.2% higher, notching the third straight session of gains.

Among carmakers, Stellantis N.V. (NYSE:STLA) rose 1.5%. Ferrari N.V. (NYSE:RACE) closed up 0.7%, positively reacting to its victory in Sunday's Formula 1 Grand Prix in Monte Carlo.

Among major banks, UBS Group AG (NYSE:UBS) outperformed, up 1%.

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Photo via Shutterstock.

Posted In: ASML BAYRY DAX E ENLAY EWI EWP EWQ EWU FXE IEV LVMUY NVO RACE RWEOY STLA UBS VWAGY