European stock markets experienced widespread gains on Tuesday as investors evaluated new economic data from both Europe and the United States and remained optimistic about potential interest rate cuts from multiple central banks.
The pan-European Stoxx 600 rose by 0.15%. In particular, the U.K.'s FTSE 100 increased by 0.16%, France's CAC 40 rose by 0.2%, while Germany's DAX dipped slightly by 0.14%. Switzerland's SMI also showed a modest gain of 0.14%.
Elsewhere in Europe, stock markets in Austria, the Czech Republic, Finland, Iceland, Ireland, Poland, Portugal, Russia, Spain, Sweden, and Turkey all closed higher. Contrarily, Belgium, Greece, and the Netherlands saw declines, while Denmark and Norway ended the day flat.
In the U.K., Ocado Group's shares surged by 8.1%. Vodafone Group also saw an uptick of 4.7% following a reported 2.2% increase in organic earnings for 2024. Glencore appreciated by 3.6%, and companies such as BT Group, St. James's Place, Rightmove, Burberry Group, SSE, Severn Trent, Schroders, Airtel Africa, United Utilities, Centrica, and Auto Trader Group saw gains ranging from 1.4% to 3%.
However, Anglo American Plc's shares dropped by 3.2% after revealing plans to sell off several assets as part of a restructuring effort. DCC fell by 2.3%, and Flutter Entertainment declined by 2% after reporting a larger-than-expected quarterly net loss. Shell and IHG also ended the day notably lower.
In the German market, Sartorius saw a significant increase of more than 4%. Commerzbank rose by approximately 3.2%, while Volkswagen, Merck, and Puma gained between 2.3% and 2.6%. Other companies such as Porsche, Fresenius Medical Care, Qiagen, Deutsche Bank, Mercedes-Benz, RWE, Daimler Truck Holding, and Adidas also experienced strong growth.
Conversely, Brenntag plummeted by more than 8%, and Hannover Rueck fell by 3.5%, even after posting solid first-quarter results and affirming its 2024 guidance. Rheinmetall decreased by 2.8% after underperforming in sales and profit forecasts for the first quarter. Siemens, Deutsche Boerse, Beiersdorf, E.ON, and SAP saw declines between 1% and 1.5%.
In France, Societe Generale surged by nearly 4%, with Stellantis, Veolia, STMicroElectronics, and Kering gaining between 1.9% and 2.2%. Eurofins Scientific, LVMH, Renault, and Pernod Ricard also ended the day with notable gains. However, Unibail Rodamco, Sanofi, Publicis Groupe, and Danone recorded losses.
In the U.K., average earnings showed better-than-expected growth in March, although the jobless rate rose slightly, employment fell less than anticipated, and vacancies continued to decline—indicating a cooling labor market. This data provides further evidence for the Bank of England, which is preparing to lower interest rates soon. Preliminary data from the Office for National Statistics indicated that wages, excluding bonuses, grew by 6% year-on-year during the January to March period.
Bank of England Chief Economist Huw Pill stated it is "not unreasonable" for the central bank to consider rate cuts over the summer.
Germany's consumer price inflation held steady at 2.2% in April, as initially estimated, remaining unchanged from March and marking the lowest since May 2021. However, EU harmonized inflation slightly rose to 2.4% from 2.3%, as estimated.
Investor sentiment in Germany improved for a tenth consecutive month in May, reaching its highest level in over two years. This optimism is driven by the anticipated interest rate cut by the European Central Bank in June and increased export demand from China. The ZEW Indicator of Economic Sentiment for Germany climbed to 47.1 from 42.9 in April.
Meanwhile, U.S. Labor Department data indicated that producer prices in the U.S. increased more than expected in April. The producer price index for final demand rose by 0.5% in April, following a revised 0.1% dip in March. Economists had anticipated a 0.3% rise, compared to the previously reported 0.2% uptick for March.
Additionally, the annual rate of producer price growth accelerated to 2.2% in April from a downwardly revised 1.8% in March, aligning with expectations that annual producer price growth would inch up to 2.2% from the initially reported 2.1% for the previous month.
