FX.co ★ European Stocks Close Notably Higher On Encouraging Data, Rate Cut Hopes

European stocks closed at a high on Tuesday, with several markets reaching significant multi-year or multi-month highs. Among these, the U.K.'s FTSE 100 hit a new all-time high. Positive regional economic data, along with the anticipation of earnings and economic updates from the U.S., boosted investor confidence.

The geopolitical landscape, which had previously caused concern, was relatively calm. This, coupled with the expectation of rate cuts from the European Central Bank and several other European central banks, also contributed to the market's buoyant mood.

The pan-European Stoxx 600 climbed 1.09%. The U.K.'s FTSE 100, despite coming off the day's high, still ended 0.26% up. Germany's DAX had a major surge of 1.55%, while France's CAC 40 saw a comfortable increment of 0.81%. Switzerland's SMI settled with a gain of 1.25%.

Several other European markets, including Austria, Belgium, Denmark, Greece, Netherlands, Portugal, Spain, and Sweden, closed notably higher, while Poland, Russia, and Turkey performed weakly. Norway, however, remained flat.

In the UK, Associated British Foods, owner of Primark, saw near 9% surge after it revised its annual profit guidance upwards, following a 39% hike in its first-half profits. Meanwhile, Ocado Group and JD Sports Fashion witnessed increments of about 5.4% and 4% respectively. JD Sports Fashion proposed to acquire Hibbett for $1.08 billion.

On the other hand, Anglo American Plc fell by nearly 2.5% after it revised its diamond production guidance downwards.

Germany's response was encouraging, with Sartorius rallying 6.7% following Danaher's stronger-than-expected quarterly sales and earnings. SAP, the software maker, gained more than 5% after it confirmed its 2024 outlook.

France also saw gains with BNP Paribas, Publicis Groupe, among others, ending the day with increments between 1.5 to 2.5%.

In terms of economic activity, the euro area's private sector expanded the most in nearly a year in April, according to S&P Global flash surveys. This was a result of strength in the service sector offsetting a continuing downturn in the manufacturing activity. Business expectations about the coming twelve months cooled slightly but remained second-highest in last 14 months.

In France, April saw the private sector nearing stabilization, while Germany's private sector expanded for the first time in ten months driven by solid services activity increase.

In the UK, private sector economy saw rapid growth in April, largely due to robust growth in the service sector. However, the manufacturing sector turned to contraction in April.