On Tuesday's trading, the key European stock indices are steadily increasing.
At the time of writing the article, the STOXX Europe 600 index of Europe's leading companies rose by 1% to 410.93 points.
At the same time, the shares of Italian machine building holding Leonardo SpA, Finnish machine building company Wartsila Oyj and Polish mining company KGHM Polska Miedz SA soared by 6.6%, 6.7%, and 5.5% respectively. They topped the list of major gainers among the STOXX Europe 600 components.
The shares of Belgian telecommunications company Proximus, British online supermarket Ocado Group PLC and Spanish power distribution company Endesa SA were top losers. They plunged by 5%, 4.5%, and 2% respectively.
Meanwhile, the British FTSE 100 advanced 0.75% to 7174.11 points, the French CAC 40 gained 1.81% and remained at 6027.49 points and the German DAX jumped by 1.22% to 13426.38 points.
French energy company Air Liquide SA stock soared by 3.7%. Earlier, the company's management announced that the firm had signed a long-term agreement with Swedish energy giant Vattenfall to build an offshore wind farm.
Shares of Swiss low-cost airline EasyJet increased by 0.1% as it announced that it had ordered 74 new jets from aircraft maker Airbus SE the day before. The new order is valued at nearly $6.5 billion. At the same time, the company's management announcement that in June-August the firm will cut some flights due to staff shortage and restrictions on flights at Gatwick and Amsterdam did not affect steady growth of EasyJet stock.
Market sentiment
Experts believe the major reason for such a significant rise of European stocks on Tuesday is general optimism in the global financial markets. Thus, the key Asian stock indices have been increasing dramatically since early morning. US stock futures also surged after the weekend. Today, the cryptocurrency market is characterized by positive sentiment as well. Bitcoin and Ethereum are rising by more than 3% after their collapse last week.
Moreover, European investors expect an increase in revenue of issuers despite the prospects of recession in the global economy.
Therefore, although inflation in the euro area and in the world is rising permanently, most market analysts issue optimistic forecasts of the financial future of separate companies and predict an increase in their income in 2022 and 2023.
Notably, according to the final data from the EU Statistical Office, the consumer price index in the euro area rose by 8.1% year-on-year in May compared with 7.4% in April. The figure was the highest since the data were first calculated.
Meanwhile, the US Federal Bureau of Labor Statistics estimated that annualized inflation in the country had surged to 8.6% last month, the worst figure in 40 years since 1981. At the same time, market analysts forecasted that the consumer price index would remain at April's level of 8.3%.
Previous trading results
On Monday, European stock indices showed a corrective growth. At the same time, last week was considered the worst since March 2022. European stock exchanges collapsed by 4-5% during the past five trading days.
Consequently, the STOXX Europe 600 index of Europe's leading companies rose by 0.96% to 407.14 points.
Shares of Norwegian IT-company Adevinta ASA and German travel agency TUI AG were major gainers among the components of STOXX Europe 600. They added 9.3% and 8.1% respectively.
Irish producer of building materials Kingspan Group Plc stocks were top losers. They plummeted by 11%.
The British FTSE 100 gained 1.5% to 7121.81 points, the French CAC 40 added 0.64% to 5920.09 points, and the German DAX increased by 1.06% to 13265.6 points.
The shares of French carmaker Renault SA soared by 9.7% yesterday after the news came that analysts at independent US investment firm Jefferies had improved their forecast for its stock.
The market capitalization of British online food delivery company Deliveroo PLC plummeted by 1.9% after the company's management announced that they had appointed a new chief financial officer.
Last week, global central banks' permanent monetary policy tightening became a significant downward factor for the European stock market. Investors are seriously concerned about the prospects of rising economic recession.
According to the outcome of the two-day meeting on June 14 and 15, the US Federal Reserve raised its benchmark interest rate immediately by 75 basis points to 1.50-1.75% for the first time in 28 years.
During the press conference following the US Federal Reserve's meeting its Chairman Jerome Powell also stated that the benchmark rate might be raised by another 50-75 basis points the following month.
Powell is likely to make a hawkish statement to the US House of Representatives later this week.
According to the outcome of Thursday's meeting, the Bank of England raised the base rate by 0.25% for the fifth time in a row since December 2021. The current rate of 1.25% year-on-year was the highest in the last 13 years. Moreover, the British central bank issued a forecast of accelerating annual inflation in the UK above 11% by October 2022.
On the same day, the Swiss National Bank unexpectedly raised its benchmark rate by 50 basis points to minus 0.25% per year for the first time since 2007. Besides, the regulator said it might raise rates again to curb inflation in the near future.
During her speech on Monday night, European Central Bank President Christine Lagarde pointed to the growing risks to financial stability and the possibility of a sharp drop in asset values.
Experts assume that the regulator's representatives may demand to raise benchmark interest rates by 50 basis points during several meetings. Moreover, the European Central Bank plans to accelerate creation of a new instrument to limit fragmentation in the euro area that will help the regulator to achieve a decrease in the divergence in borrowing costs for different countries.
