European stocks gained, boosted by a record-high close on Wall Street, after Federal Reserve Chair Jerome Powell said inflation was heading downwards.
The CAC 40 Index outperformed at open, rising 0.7% as of 9:20 a.m. in Paris, as more than 200 candidates withdrew from France’s second election round in an effort to unite against Marine Le Pen’s far right party. The Stoxx 600 Index advanced 0.5%, with basic resources and technology stocks leading gains. Healthcare was the only sector in negative territory.
Among single stocks, Sanofi SA edged higher after its blockbuster Dupixent was cleared for European patients with a chronic lung disorder, creating another avenue of growth for the drug. Anglo American Plc rose, as the company is considers options to push ahead with selling its coal business after an explosion at its flagship Australian mine. Meanwhile, Hennes & Mauritz AB shares ticked higher after Deutsche Bank AG upgraded its recommendation on the stock to buy.
This year’s European equity rally has stalled in recent weeks amid political turmoil following the snap election call in France. The first round of the legislative elections narrowed the possible outcomes to two — both of which presage prolonged uncertainty for investors. The second round of voting is scheduled for Sunday.
Investors will also keep an eye on final services PMI numbers from the euro area on Wednesday, while France, Italy and Germany will also release PMI figures.
Wolf von Rotberg, equity strategist at Bank J. Safra Sarasin, said the final PMI numbers are unlikely to deviate much from the preliminary releases but noted that “the cycle in Europe is softening again, which should keep the upside limited in the coming weeks.”
Sentiment was also dampened by comments from European Central Bank President Christine Lagarde, who said Tuesday there is not yet sufficient evidence that inflation threats have passed, implying officials will take a break from cutting interest rates this month.
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