European markets rally as investors await ECB interest rate decision

European markets began the month on a positive note on Monday, continuing last week’s rally as investors anticipate the European Central Bank’s upcoming interest rate decision later this week.

In the opening deals, the pan-European Stoxx 600 index rose by 0.9%, with all sectors and major bourses showing gains. Technology stocks led the upward trend with a 1.6% increase, while the travel and leisure sector also performed well, climbing by 1.5%.

The ECB is expected to cut interest rates on Thursday, marking the first reduction since 2019. This anticipated move is significant as it would precede action from the U.S. Federal Reserve, which usually leads in setting monetary policy.

Investors will be closely monitoring whether the slightly higher-than-expected euro zone inflation data released on Friday will influence the ECB’s decision-making.

In Turkey, inflation surged to 75.5% annually in May, according to the Turkish Statistical Institute. The data revealed that the most significant consumer price increases over the year were in education, housing, and restaurant prices.

Euro zone manufacturing activity reached a 14-month high in May, according to the latest HCOB purchasing managers index released on Monday. In Spain, activity grew at its fastest pace in over two years. Meanwhile, France and Germany showed signs of recovery, though their activity remained below the 50-point growth threshold.

There are no major corporate earnings expected during Monday’s session. However, investors will be watching oil prices closely. These prices rose after OPEC+ decided on Sunday to extend most of its oil output cuts into 2025.

Fidelity European Trust PLC (LON:FEV) aims to be the cornerstone long-term investment of choice for those seeking European exposure across market cycles.

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