Amidst a backdrop of political uncertainty, particularly in France, European stock markets have demonstrated resilience, with the STOXX 600 index climbing 0.3% from its weekly low. Notably, the technology and banking sectors have led the rebound, with technology stocks increasing by 1.6% and banking stocks by around 1%. This positive market movement comes despite President Emmanuel Macron’s call for early elections after his centrist party’s defeat in the European Parliament elections. The French CAC 40 index also saw a recovery, rising 0.5% after a significant drop the previous week .Eurostat’s final figures released on Tuesday revealed that the eurozone’s harmonized consumer price index (HICP) rose by 0.2 percentage points in May to 2.6%, while Spain’s inflation increased by 0.4 percentage points to 3.8%, surpassing the community average. The core inflation rate, which excludes energy, food, alcohol, and tobacco, also saw a slight increase from 2.7% in April to 2.9% in May. ECB President Christine Lagarde has highlighted the persistence of internal inflationary pressures, particularly due to high wage growth, suggesting that inflation is likely to remain above the 2% target well into the next year.Investors are now turning their attention to upcoming economic indicators, including UK and Eurozone inflation data, as well as interest rate decisions from central banks in Switzerland, Norway, and the UK later this week. The anticipation of these key indicators, along with the ECB’s cautious stance on monetary policy, suggests that markets are navigating an uncertain economic environment with a focus on inflationary trends and political developments.
Key points
- European stock markets have rebounded, led by gains in the technology and banking sectors.
- Political uncertainty in France, following President Macron’s call for early elections, has not significantly impacted the positive market trend.
- Eurozone inflation rose to 2.
- ECB President Christine Lagarde warns of persistent inflationary pressures and suggests a cautious approach to future interest rate decisions.
6% in May, with core inflation at 2.
9%, according to Eurostat.