European Market

The pair finds support as the contraction of the UK economy bolters the case for a rate cut by the Bank of England, but persistent inflation can keep it in cautious mode.

The European Union has approved tariffs of up to 45% on electric vehicles imported from China to counter alleged unfair subsidies and protect local manufacturers. This decision has raised concerns among member states, particularly Germany, about potential retaliation from China and its impact on European exports. Chinese EV makers now face challenges in adjusting to these tariffs, with some considering production shifts to Europe to mitigate the financial burden.

The index is cautious and stays in consolidation as today’s inflation update sustains uncertainty around the central bank’s rate path

The French stock market opened higher on Monday, despite the victory of Le Pen’s party, as investors appear hopeful that it won’t secure outright in the second round

The BoE kept rates unchanged ahead of the July 4 elections, but remains on track to pivot, supporting the index

The pair reacted higher after the Swiss National Bank (SNB) slashed rates for second straight time, whereas the Fed is reluctant to pivot

UK inflation for May dropped to the Bank of England's target of 2.0%, as reported by the Office for National Statistics, marking a decrease from 2.3% in April. This figure matched economists' forecasts, causing a slight rise in the sterling to $1.2732. Services inflation, a crucial indicator for the BOE, decreased to 5.7% from 5.9% in April, while core inflation, excluding certain volatile items, fell to 3.5% from 3.9%.

The European Union announced higher tariffs on Chinese electric vehicle imports due to significant unfair subsidies, posing a threat to European EV manufacturers.

The ECB slashed rates for the first time in nearly five years, but adopted a cautious stance around future moves, creating some pressure for the German index

Tomorrow the ECB is likely to deliver a 25-bps cut – the first major advanced economy central bank to begin its cutting cycle. The cut is expected, with markets having priced in the cut from 4% to 3.75% for a few weeks now. However, forward guidance will be key here, with market participants focusing on any clues provided regarding future policy direction.

The index pulls back from its recent record highs and tests key technical levels, amidst uncertainty around the central bank’s rate path and July’s general election