European stock markets climb amid easing political concerns

European stock markets saw a rise on Tuesday, buoyed by diminishing worries over regional political turmoil during a week that features several central bank policy meetings, including one from the Bank of England. By 03:05 ET (07:05 GMT), the DAX index in Germany was up by 0.6%, the CAC 40 in France increased by 0.6%, and the FTSE 100 in the UK climbed 0.5%.

Sentiment in Europe has recovered after the region’s stock markets took a hit last week following the gains of right-wing parties in the European Parliament elections. This period of turmoil culminated in French President Emmanuel Macron calling for a snap election. Opinion polls suggest that the far-right National Rally will likely win the upcoming French election ahead of a left-wing alliance, with Macron’s centrist group trailing in third place. Although this result is not ideal for most investors, last week’s drop in the French CAC-40 index, which fell by more than 6%—its worst weekly loss since March 2022—was perceived as an overreaction. Consequently, the index is making a recovery.

Investors are also closely monitoring the final reading of May’s consumer price index for the eurozone, expected later in the session. The annual figure is anticipated to confirm an increase to 2.6%, up from 2.4% the previous month. Earlier this month, the European Central Bank cut interest rates by 25 basis points, but there remains uncertainty about the timeline for future reductions. Central banks in Norway, the UK, and Switzerland are also scheduled to meet this week. It is expected that Norway and the UK will maintain their current rates, while the Swiss National Bank is predicted to deliver another 25 basis points of easing. Although the Bank of England is not expected to alter its key rates, the voting pattern of the Monetary Policy Committee will be scrutinised for hints of future actions. Last month, seven members voted to hold rates steady while two voted for a cut. Earlier on Tuesday, the Reserve Bank of Australia kept its rates at a 12-year high of 4.35%, as anticipated.

Meanwhile, crude oil prices dipped on Tuesday, relinquishing some of the gains from the previous session as the global demand outlook remains uncertain amid abundant supply. By 03:05 ET, US crude futures (WTI) were down by 0.2% at $79.56 per barrel, while Brent crude dropped by 0.2% to $84.09 per barrel. Both benchmarks had gained around 2% on Monday, closing at their highest levels since April. Data released earlier in the week indicated that China, the world’s largest crude importer, is struggling to achieve a robust economic recovery, while the US economy is grappling with the prolonged impact of high interest rates.

JPMorgan European Discovery Trust plc (LON:JEDT) is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.

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