European shares end flat as investors await for inflation test
By Ankika Biswas and Johann M Cherian
(Reuters) -Europe’s STOXX 600 closed flat on Monday, as investors geared up for a slew of economic data from the euro zone and a key U.S. inflation print later in the week that could test the benchmark index’s record-breaking run.
The pan-European STOXX 600 was little changed, not far away from record high levels. Automobiles led sectoral gains, recovering from a four-day losing streak, while defence stocks were the worst hit with a 1.2% loss.
The benchmark index hit a record high on Friday, logging its biggest weekly gain since late January, of 3%, underpinned by strong corporate earnings. The STOXX 600 regained its momentum midway into May, after geopolitical tensions and monetary policy uncertainties saw it wilt in April.
All eyes will be on the U.S. producer and consumer prices inflation readings, due on Tuesday and Wednesday, which will further set the tone for the Federal Reserve’s anticipated rate cuts this year.
Back home, the euro zone’s final inflation and flash first-quarter GDP in the latter half of the week will be scrutinized to gauge the interest rate path for the European Central Bank, which has indicated a June cut, flagged uncertainties around policy outlook beyond that and stressed its independence from the Fed.
“Even though many ECB speakers have stressed independence from the Fed, history tells us that divergences over the last 25 years were in hindsight seen as missteps,” analysts at ING Research wrote.
“Inflation dynamics tend to be linked and thus dismissing signs of reflation across the pond is ill-advised.”
On the day, healthcare stocks gained, with Novo Nordisk in the lead with a 3% rise. Denmark’s Medicines Agency said the country faced a supply shortage for two doses of the firm’s Wegovy weight-loss drug in the coming months due to rising demand.
AP Moeller-Maersk jumped 7% to top the main index, boosted by a rise in freight rates amid higher trade volumes and the Red Sea crisis.
Spanish pharmaceutical company Almirall advanced 1.3% after a first-quarter results beat and reiteration of its full-year profitability targets.
German consumer electronics firm Ceconomy climbed 6.2% after announcing full-year earnings above estimates.
On the flip side, Holcim lost 4% as the Swiss cement maker’s stock was trading ex-dividend, while EDP dropped 3% after brokerage Goldman Sachs downgraded the stock to “neutral” from “buy”.
OX2 surged 40% after private equity firm EQT said it had made a recommended cash offer to buy the Swedish renewable energy group for 16.4 billion crowns ($1.51 billion).
(Reporting by Ankika Biswas and Johann M Cherian in Bengaluru; Editing by Sherry Jacob-Phillips, Mrigank Dhaniwala and Alex Richardson)
