May 27 2024: European stocks remained subdued on Monday, with several major markets closed and investors adopting a cautious stance ahead of key inflation data from the United States and Europe later this week.
The pan-European STOXX 600 index inched up 0.1% at 0804 GMT. With the U.S. and UK markets closed on Monday, trading activity was light across the board.
Inflation Data and ECB Meeting in Focus
Investors are awaiting May consumer prices data for the euro zone later this week to assess the European Central Bank’s (ECB) interest rate path ahead of a policy meeting next week.
The central bank appears likely to begin easing interest rates at the upcoming meeting with a 90% probability, and softer inflation data could solidify the June rate cut .
“Energy prices have been contained, and there is not much reason for European inflation to show an unexpectedly upward print,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank. “If inflation is as expected, this week’s data will most probably alter the expectations beyond June rather than the June meeting itself.”
German Business Morale and ECB Commentary
A survey indicated that German business morale stagnated in May, falling short of expectations for improvement. “The German economy is gradually working its way out of the crisis,” the report noted.
The benchmark German index DAX rose 0.12%.
ECB chief economist Philip Lane told the Financial Times that monetary policy must remain restrictive this year as wage growth will not normalize until 2026.
U.S. Inflation Data and Market Impact
U.S. inflation data, also due on Friday, could help traders gauge the timing and extent of possible rate cuts by the Federal Reserve this year.
Sector Performance and Corporate News
The oil and gas index added 0.5% as crude prices edged higher, while the utilities sector gained 0.7%, leading sectoral advances.
In corporate news, shares of salmon producer P/F Bakkafrost led declines on the STOXX 600 index, slipping 3.1% after the ISA virus was detected in two pens at its farming site A-19 Vágur.