European markets higher as investors look ahead to ECB meeting

The ECB meets on Thursday, and money markets price in an almost certain chance of a first interest rate cut. However, there is uncertainty about the future path of eurozone rates.

The pan-European Stoxx 600 was up 0.9 percent by 2:40 p.m. in London, with all major bourses and the majority of sectors in the green. Tech stocks led gains, up 3.25 per cent, while mining stocks fell 0.38 per cent.

Zara owner Inditex rose 4.8 per cent after reporting 7 per cent sales growth in the first quarter. The company said Wednesday that sales hit 8.2 billion euros ($8.9 billion) in the three months to April, broadly in line with expectations, according to an LSEG poll.

Euro zone business activity grew for the third consecutive month in May, and the final estimates of the region’s composite purchasing managers’ index showed on Wednesday. Growth in the services and manufacturing sectors was steady in Germany, Spain and Italy but dipped slightly in France.

Corresponding data for the U.K. showed business activity also expanded in May, but slower than in April.

The ECB is widely expected to cut interest rates for the first time since 2019 when policymakers meet on Thursday. Still, investors will watch closely to see whether a slightly higher-than-expected euro zone inflation print released last Friday will affect the central bank’s decision-making.
 

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