PARIS: European shares ended higher on Monday, with healthcare and bank stocks in the lead as investors awaited key US inflation data later this week for fresh clues on the Federal Reserve’s monetary policy path.
The pan-European STOXX 600 index rose 0.4% even as gains on Wall Street faded after a few disappointing earnings reports.
The European equities benchmark came under pressure last week when the European Central Bank, unlike the Fed, signalled that more interest rate hikes were on the cards as inflation across the 20 countries that share the euro remains stubbornly high.
The focus is now on US consumer prices reading for April due on Wednesday for hints on whether rate cuts in the world’s largest economy are coming soon. The Fed raised rates last week in an action that may be the last of its current tightening campaign.
“We expect another month of discouraging CPI prints,” economists at BNP Paribas wrote in a note.
“Fed officials will likely be wary in acknowledging progress on the inflation front, so as not to be caught off-side by yet another false dawn. Policymakers will likely need to see several more months of sustained improvement before they begin softening their inflation assessment.” Additionally, the Fed’s Senior Loan Officer Opinion Survey due later in the day will be parsed for clues on the state of lending, given the recent turmoil in US regional banks.
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