Europe: Shares rise as Wall Street rallies; ECB decision in focus
EUROPEAN shares rose on Monday with tech stocks leading the charge, tracking a Wall Street rally that drove the benchmark S&P 500 to fresh record highs while investors awaited the European Central Bank’s policy decision later this week.
The pan-European Stoxx 600 index ended 0.8 per cent higher following a 1.5 per cent decline last week. The S&P 500 index logged a fresh record high on Monday, topping the all-time peak it hit last week that was fuelled by a rally in US chipmakers and heavyweight technology stocks.
Technology stocks in the euro zone climbed 2.1 per cent on Monday, and led gains among sectoral indexes.
ASML Holdings rose 3.1 per cent after Bernstein upgraded the Dutch semiconductor equipment maker’s rating to “outperform” from “market-perform”.
Government bond yields across the continent eased, with the benchmark German 10-year government bond last standing at 2.26 per cent.
Investors are waiting for the ECB’s monetary policy decision, due on Thursday, for clues on the timing of future interest rate cuts.
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“We continue to believe that a shortening of the policy horizon of the ECB increases the relevance of its own inflation projections for policy decisions ... so long as the ECB projects 2025 inflation above 2 per cent, we expect resistance to rate cuts to remain strong,” economists at Citi wrote.
“Once those projections fall below 2 per cent, we expect pressure to ease policy to become irresistible ... we expect this will be the case in June, but not earlier.”
Traders have priced in a cut of about 130 basis points in interest rates this year, with a 96 per cent chance of the first cut coming in June.
The banking sector jumped 1.3 per cent, helped by a 2.8 per cent gain in Barclays after an upbeat view from Morgan Stanley, ahead of the British bank’s annual results and investor update next month.
On the downside, Commerzbank shed 3.4 per cent after BofA Global Research cut the German lender to “underperform” from “neutral”.
Belimo dropped 7.8 per cent after the Swiss heating and ventilation solutions maker’s 2023 revenues missed market estimates.
Italian shares were an outlier, down 0.3 per cent, weighed down by a 2.2 per cent fall in luxury car maker Ferrari.
Among other movers, shares of Kindred jumped 16.7 per cent after French gaming company La Francaise des Jeux launched a takeover offer for its European online peer in a US$2.8 billion deal. La Francaise’s shares climbed 6.2 per cent. REUTERS
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