German stocks lift Europe, ECB meeting awaited
European shares edged up on Monday, with Germany’s DAX leading the way following robust industrial production data from the region’s largest economy. Despite this, caution prevailed ahead of the European Central Bank’s (ECB) upcoming policy decision, Reuters reported.
The STOXX 600 index rose 0.2 per cent by 0845, with Germany’s DAX slightly outperforming the rest of the continent with a 0.5 per cent increase.
Industrial production in the region exceeded expectations in February, boosted by the construction industry.
Cyclical sectors, including basic resources, automobiles, and industrial goods and services, saw gains ranging from 0.4 per cent to 1.3 per cent. However, analysts maintained a cautious outlook.
“Today’s industrial data is a comfort for the German economy, but it does not signal the start of a significant recovery,” said analysts at ING Bank.
They added that lower interest rates, anticipation of upcoming European Central Bank rate cuts, lower gas and electricity prices, and the resilience of the US economy should provide more relief to the German industry in the coming months.
Ahead of the ECB’s monetary policy meeting on Thursday, Germany’s 10-year government bond yield reached a two-and-a-half-week high amid global anxiety about the timing of interest rate cuts.
Traders are widely expecting the central bank to maintain interest rates and will be looking for any indications that a first rate cut of 25 basis points could be announced in June.
The benchmark index experienced its worst week in over two months on Friday as US policymakers downplayed market expectations for imminent interest rate cuts, which had driven gains in most developed markets since late 2023.
Following a strong US jobs report on Friday, traders are now firmly expecting the ECB to deliver its first interest rate cut before the Fed in June.
In other news, Atos SE saw a 21.6 per cent jump, heading for its best day since January, as Paris-based Butler Industries joined a consortium to rescue the struggling French IT consulting firm.
Believe fell by 9.7 per cent after US-based Warner Music Group announced it would not submit a bid to acquire the French digital music company.
Bayer’s shares dropped by 0.8 per cent as a US judge reduced a $1.56 billion verdict against the pharmaceutical company to $611 million for three people who claimed its Roundup weed killer caused their cancer by cutting punitive damages.
Zalando, the German online fashion retailer, surged 4.9 per cent to the top of the STOXX index after brokerage Citigroup upgraded it to “buy” from “neutral.”.
