European stocks rise on expectations of possible ECB interest rate cuts

(MENAFN) European Stocks saw modest gains in trading yesterday, with the STOXX 600 index closing around 0.3 percent higher, nearing record highs reached earlier this month. The uptick in European equities was accompanied by a decline in government bond yields, reflecting growing speculation regarding potential interest rate cuts by the European Central bank (ECB). This comes despite subdued trading activity due to public holidays observed in some major global markets.

ECB policymakers have hinted at the possibility of interest rate reductions as inflation rates decelerate. However, they have also emphasized the need for patience in implementing monetary easing measures, even as the direction of policy becomes increasingly clear. Across the continent, government bond yields experienced a downward trend, with the yield on benchmark ten-year bonds dropping to 2.547 percent.

Investor focus remains on upcoming consumer price data for the eurozone in May, scheduled for release on Friday, along with inflation figures from key economies such as Germany, Spain, and France throughout the week. Expectations are high for the ECB to commence interest rate cuts at its upcoming meeting, with market bets indicating a probability of over 90 percent for such a move, according to data from the London Stock Exchange Group.

Additionally, US inflation data slated for release on Friday is anticipated to provide further insights into the Federal Reserve's monetary policy stance, potentially influencing market expectations regarding the timing and magnitude of interest rate adjustments later in the year.

Despite subdued trading volumes due to closures in the US and UK markets for public holidays, most major sectors on the STOXX 600 index saw gains. Utility companies led the upward trajectory with a 1.1 percent increase, followed closely by a 1 percent rise in the automobile companies index. Overall, market sentiment remains cautiously optimistic amidst ongoing speculation surrounding central bank policies and economic indicators. 



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