European stocks were higher on the last day of the month. The inflation data previously released by the US reassured the market and maintained hopes of cutting interest rates.
The Stoxx Europe 600 Index rose 0.2% on Thursday, extending the February gain to 1.8%. This is the fourth month in a row that the index has risen, and it is also the longest continuous increase since 2021.
The Federal Reserve's favorite inflation indicator, the core personal consumption expenditure index, rose 2.8% in January, in line with expectations. On Wednesday, New York Federal Reserve Governor John Williams sought to ease the market's interest rate cut expectations. He said there is still a long way to go to achieve the 2% inflation target.
Benoit Peloille, chief investment officer of Natixis Wealth Management, said, “The inflation index favored by the Federal Reserve is slowing down, which is quite good news.”
Media stocks, construction stocks, and materials stocks performed best. Among them, London-listed construction materials company CRH Plc once hit a record high. Driven by inflation data, renewable energy stocks expanded their gains. Among them, Nordex was one of the biggest gainers. Healthcare and food, drink, and tobacco stocks are underperforming.
European stock markets retreated slightly after hitting record highs last week. On average, strategists expect the European stock market to hardly rise for the rest of the year, but bullish calls are growing.
Bank J. “The stock market should benefit slightly, but for risk assets, what is more important is tomorrow's ISM and PMI data,” said Wolf von Rotberg, stock strategist at Safra Sarasin.
At the same time, Citigroup's Beata Manthey has a constructive view of the stock market, believing that the Big Seven European stock market composed of Novo Nordisk, ASML Holding NV, LVMH, SAP SE, Schneider Electric, Lifeng Group, and Ferrari have cheap valuations. The performance of this group of stocks lags behind America's “Big Seven Tech”, leaving room to catch up.
In terms of individual stocks, Kirriff recorded the biggest decline on record. Earlier, the company announced that this year's cash earnings would fall short of investors' expectations, fueling broader concerns raised by last month's bear sniper. Grocery e-commerce company Ocado Group Plc rose after the company said it was making progress in rolling out its automation technology. Consumer health products company Haleon Plc is one of the top performers in the overall index, after the company reported stronger growth in the previous quarter. ams-OSRAM AG suffered a serious setback after unexpectedly cancelling a key project.