European Stocks Rebound, Oil Drop Lifts Sentiment
European stock markets rebounded on Tuesday (June 2nd) after being hit the previous day, helped by weakening oil prices amid hopes that a US-Iran peace deal could still be achieved. The pan-European Stoxx 600 index closed up 0.7%, with major bourses in London, Paris, Frankfurt, and Milan all ending in the green.
This gain came after the Stoxx 600 had fallen to a one-week low on Monday, when the market considered the chances of an end to the Iran war diminishing. Sentiment improved after Israel and Hezbollah announced they would restrain hostilities in Lebanon, easing the risk of regional escalation and allowing the market to reduce energy risk premiums.
On the corporate side, stock movements remained selective. Abivax plunged 43.6% after the French biotech company reported that some patients in its ulcerative colitis clinical trial developed cancer, weighing on certain healthcare sectors despite the overall index's strength.
On the macro front, preliminary data showed eurozone inflation rose to an estimated 3.2% in May, in line with Reuters poll forecasts. This rise in inflation was primarily driven by surging energy prices, reinforcing market expectations that the ECB is highly likely to raise interest rates at its meeting next week.
The energy component was again the biggest driver. Eurozone energy prices rose 10.9% year-on-year in May, slightly higher than the 10.8% recorded in the previous month. This means that even though oil prices fell and boosted equity sentiment today, energy inflation pressures remain a key factor keeping the market sensitive to geopolitical headlines and the ECB's policy direction. (Arl)
Source: Newsmaker.id
