European shares rise on energy boost, rate-cut speculation

European shares rise: European shares climbed on Monday, driven by investor optimism regarding potential interest rate cuts by major central banks. Spanish defence and technology firm Indra saw a jump in its stock price following a strong first-quarter profit report.

The pan-European STOXX 600 index was up by 0.3 per cent as of 0830 GMT, while UK equities remained closed due to a bank holiday.

Supporting the positive sentiment, a media report highlighted European Central Bank Chief Economist Philip Lane's remarks suggesting a stronger case for a June rate cut due to easing services inflation. Additionally, Friday's softer-than-expected US jobs report reinforced expectations of the Federal Reserve easing rates this year.

Michael Field, European market strategist at Morningstar, commented, "Data is stacking up quite nicely for the ECB, but the situation for the Fed is that they have to wait longer and see how economic data pans out."

Energy stocks were among the top gainers, with oil prices rising after Saudi Arabia increased June crude prices for most regions and amid slim prospects for a Gaza ceasefire deal.

Despite uncertainties surrounding European businesses' health, Middle East tensions, and the ECB's policy outlook beyond June, the STOXX 600 has seen a 6 per cent year-to-date increase, slightly lagging behind its US benchmark peer S&P 500.

Goldman Sachs raised its 2024 earnings growth forecast for STOXX 600 companies to 6 per cent, citing factors such as higher commodity prices, stickier inflation, a weaker currency, and stronger economic growth.

Indra saw a 7.2 per cent surge after reporting a 40 per cent rise in first-quarter net profit, driven by strong orders amid global tensions spurring demand for air defences.

Maurel et Prom rose 8.3 per cent after obtaining a specific license for its operations in Venezuela.

However, Atos fell 5.2 per cent after announcing investor offers for debt restructuring and cash infusion, potentially leading to a significant dilution of existing shareholders.

PostNL dropped 3.5 per cent after reporting a wider-than-expected first-quarter loss, while Deutsche Post shed 3.6 per cent.

Danish hearing aid maker Demant A/S fell 3.6 per cent following a first-quarter sales miss.

(With Reuters inputs)