European markets started the month higher Monday, extending last week’s rally, as investors look ahead to the European Central Bank’s latest interest rate decision later this week.
The pan-European Stoxx 600 index was up 0.65% by 1:50 p.m. London time, with all major bourses and almost all sectors trading in the green. Construction stocks led gains, up 1.74%, while health care lost 0.55%.
Shares of British pharmaceutical company GSK fell to the bottom of the Europe-wide benchmark, dipping 9.2% before paring losses slightly, on news that it was set to face a jury trial over allegations that its Zantac heartburn drug caused cancer.
On the other end, shares of British retailer JD Sports added 7.5%, recovering from losses on Friday, when it reported a drop in first-quarter U.K. sales.
The ECB is widely expected to cut interest rates for the first time since 2019 when policymakers meet on Thursday. This is notable as it would mean the central bank moved before the U.S. Federal Reserve, which tends to lead the way in monetary policy.
However, investors will watch closely to see whether a slightly higher-than-expected euro zone inflation print released Friday will alter the bank’s path forward.
Turkey’s inflation accelerated to 75.5% annually for the month of May, the Turkish Statistical Institute reported Monday. The highest consumer price increases year on year were in education, housing and restaurant prices, the data showed.
Euro zone manufacturing activity rose to a 14-month high in May, the latest HCOB purchasing managers index showed. Activity in Spain grew at its fasted pace in more than two years, while in France and Germany it showed signs of recovery but remained below the 50-point growth threshold, the readings showed.
There were no major corporate earnings releases during Monday’s session. Meanwhile, investors were keeping an eye on oil prices, which rose after OPEC+ agreed on Sunday to extend most of its oil output cuts into 2025.
In Asia-Pacific, stock markets rose on the back of accelerating factory activity, with China’s Caixin survey showing manufacturing activity expanded at its fastest pace in nearly two years.
U.S. stocks also started the month in positive territory, coming off the back of a strong May in which all three major averages notched their sixth positive month in seven.
