European Equities Climb 0.4%, German Consumer Sentiment Set to Improve by 0.9 Points in June

Key Moments:

Optimism Over Trade Relations Lifts European Shares

European equity markets ticked upward on Tuesday as growing hopes of a resolution to the trade tensions between the United States and the European Union supported investor sentiment. The pan-European STOXX 600 index rose 0.41% and reached 552.78, and stocks across German and French benchmark indices also jumped.

This uptick followed yesterday’s stronger performance when the STOXX 600 index ended the session with a gain of around 1%. These market movements came after the Trump administration postponed a potential tariff hike of 50% on goods sources from the EU following discussions with European Commission President Ursula von der Leyen. Previously scheduled to come into effect on June 1st, the duty is now set to affect markets on July 9th should an agreement not be reached by then.

German Consumer Confidence Grows, Soft French Inflation Raises Expectations for ECB Action

Sentiment received an additional boost after newly released survey data showed an improvement in German consumer confidence heading into June. The report, jointly released by the GfK market research institute and the Nuremberg Institute for Market Decisions, indicated a 0.9-point month-on-month increase in the consumer sentiment index, bringing it to -19.9 points. This follows May’s rise, which marked the third consecutive month of improvement in consumer confidence. Following the report’s publication, the German DAX index jumped 0.47% and hit 24,140.28.

In France, the CAC 40 rose a modest 0.12% after inflation data for May came in lower than expected at 0.6%. The subdued price pressures may provide the European Central Bank with additional leeway to cut interest rates further, potentially as early as June. The ECB’s next meeting will be held on June 5th, when it will reduce its key interest rate from 2.25% to 2.00%, according to current forecasts by market participants.