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An improved outlook for Siemens Energy and its financial results beating expectations pulled industrial stocks higher, while a robust performance from beer maker Anheuser-Busch Inbev fueled Belgium's main index and supported the food and beverage sector of STOXX 600. Puma and Ahold Delhaize saw their value rise as their quarterly results were in line with market expectations. Germany's main index, the DAX, also surpassed its all-time highs. According to analysts at Deutsche Bank, despite some concerns, optimism prevails in the market, boosted by faster-than-expected economic growth in both Europe and China. The positive sentiment is also helped by the chance that the ECB will start cutting interest rates as early as June, which looks increasingly likely thanks to falling inflation. Nevertheless, the war in the Middle East and broader geopolitical tensions still pose risks to future economic growth. [1]
However, not all sectors celebrated market growth. Shares of car manufacturers have faced difficulties since the beginning of the month, with significant declines seen in Mercedes-Benz stock. * The stock of the German carmaker took a hit as a result of ex-dividend trading, reflecting the broader trend in the automotive sector. However, the STOXX 600 seems to have successfully weathered these problems so far.
As if that wasn't enough, the UK data further boosted overall optimism, as it was revealed that the country's GDP grew by 0.6% in the first quarter, beating expectations of 0.4%. This means that the British economy has emerged from the recession which it fell into in the second half of last year. Although the Bank of England left interest rates unchanged at its meeting on Thursday, there is an increasing chance of interest rate cuts in the next month. The UK's FTSE 100 index is also hovering at its record levels, heavily supported by a sharp year-on-year rise in profits of the IAG group airlines, which already reaffirmed their readiness for the peak summer season.
Overseas, the market mood is also positive. Although the main US indices have not yet been able to fully offset their April losses due to the Middle East tensions and the declining likelihood of monetary easing in the US this year, they posted gains after the release of more-than-expected unemployment claims. The data thus reignited hopes of a FED rate cuts, despite persistent inflation. The Dow Jones Industrial Average closed in profit on Thursday, the seventh consecutive day, while the S&P 500 index reached its highest level since early April 2024. *
All indications suggest that investor attention is now focused primarily on Europe, with all major European indices, led by the STOXX 600, having surpassed their record highs, suggesting a broader market rally underway in Europe. Promising economic results, along with strong earnings outlooks from the biggest industrial powerhouses, as well as other sectors, have contributed to this. By contrast, in the US, markets are also doing well, although data there are lagging behind Europe for now. However, such a positive development could be undermined by the threat of geopolitical escalation, which is unfortunately still present.
Source: Investing.com*
* Data relating to the past are not a guarantee of future returns.
[1] Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance. Forward-looking statements inherently involve risk and uncertainty because they relate to future events and circumstances that cannot be predicted and actual developments and results may differ materially from those expressed or implied in any forward-looking statements.
Warning! This marketing material is not and must not be understood as investment advice. Data relating to the past are not a guarantee of future returns. Investing in foreign currency may affect returns due to fluctuations. All securities transactions can lead to both profits and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance. InvestingFox is a trademark of CAPITAL MARKETS, o.c.p., a.s. regulated by the National Bank of Slovakia.
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