Commodity-linked stocks lift European equities ahead of inflation data
March 18 (Reuters) – European shares edged higher on Monday, supported by strength in commodity-linked stocks, although investor caution ahead of euro zone inflation data curbed gains.
The pan-European STOXX 600 index (.STOXX), opens new tab was up 0.1%, as of 0852 GMT.
Oil and gas (.SXEP), opens new tab stocks led sectoral gains with a 0.7% jump, tracking crude prices higher on market view that supply was tightening.
Basic resources (.SXPP), opens new tab followed suit with a 0.3% rise after industrial output and retail sales beat market expectations in top metals consumer China.
“Given the backdrop of low valuations and poor sentiment, markets will take less bad news very positively and that’s what we’re seeing in China right now,” said Ben Laidler, global markets strategist, eToro.
The technology (.SX8P), opens new tab sub-index advanced 0.4% as tech-fixated investors geared up for an annual developer conference by artificial intelligence (AI) darling Nvidia (NVDA.O), opens new tab starting later in the day.
On the data front, investors remained cautious ahead of euro zone final inflation data for the month of February and the region’s total trade balance for January expected on Monday.
The U.S. Federal Reserve, Bank of Japan and Bank of England’s monetary policy meetings, due later this week, will also be on investor radar for more clues on the trajectory of monetary policy easing cycle.
“Growth has been stronger than expected, naturally pushing back the chances of rate cuts, but it’s been replaced by stronger earnings, which is why I think markets have largely taken this in their stride,” Laidler said.
Meanwhile, European Central Bank (ECB) policymaker Pablo Hernandez de Cos reaffirmed that the central bank could start cutting interest rates in June after a reduction in euro zone inflation.
Money markets have priced in 85 basis points of ECB rate cuts by year-end.
In corporate updates, shares of Signify NV (LIGHT.AS), opens new tab climbed 4.1% after Barclays hiked the lighting solutions firm’s stock rating and price target, while TGV trains maker Alstom (ALSO.PA), opens new tab added 8.5% after Deutsche Bank upgraded its rating.
Shares in Polish fashion group LPP (LPPP.WA), opens new tab rose 8.8% to the top of STOXX 600, recouping some of last week’s losses made after a Hindenburg Research report questioned the 2022 sale of its Russian assets.
On the contrary, Logitech (LOGN.S), opens new tab was the top decliner in the index, dropping 7.2%, following announcement that Chief Financial Officer Charles Boynton will leave the computer equipment maker in May.
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Reporting by Khushi Singh in Bengaluru; Editing by Varun H K and Sherry Jacob-Phillips
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