European Stocks Set for Stronger Open

European stocks traded higher on Tuesday, with the STOXX 50 rising 0.6% and the STOXX 600 gaining 0.9%, led by technology shares amid renewed optimism surrounding AI following the recent sell-off and improving demand expectations. ASML Holding advanced 3.2%, Infineon Technologies gained 2.4%, and STMicroelectronics rose 2.7%. Other notable gainers included Siemens (+2.4%), ABB (+1.9%), and Schneider Electric (+2.6%). Siemens Energy surged nearly 5% after reiterating strong demand trends during its pre-close quarterly earnings call on Monday. In contrast, Kering (-2.6%) and Logitech (-4%9 were among the worst performers. Considering the June month, the STOXX 50 is up around 3% and has surged approximately 12% over the quarter. The STOXX 600 has advanced 1.6% in June and is up about 9% for the quarter, marking its strongest quarterly performance since October 2020, as oil prices moved back to pre-war levels and tensions in the Middle East eased.

European equity markets were on course to open higher on Tuesday as investor sentiment improved, with the recent weakness in technology stocks showing signs of easing. Market participants also turned their attention to the resumption of US-Iran peace talks in Doha, Qatar, following a pause in recent hostilities around the Strait of Hormuz. In Europe, investors are awaiting German retail sales and final UK GDP figures, along with preliminary inflation readings from Germany, France, and Italy. On Monday, ECB President Christine Lagarde said at the ECB Forum that Europe is increasingly likely to face inflationary shocks, while adding that the region’s economic resilience gives the European Central Bank scope to raise interest rates without triggering financial instability. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures both advanced about 0.6%.

European stock indices closed slightly higher on Monday with support from the technology and energy sectors. The Euro STOXX 50 added 0.2% to 6,234 and the STOXX Europe 600 rose 0.1% to 636, remaining close to its record high. Chip producers and companies with exposure to AI software rebounded following their selloff last week, with ASML adding 2.3% and Prosus jumping 2.6%. These tracked gains in the US as markets continued to gauge the appropriate positioning to speculative AI bets as the biggest players upgraded guidance last week. Meanwhile, energy producers rebounded as strikes between the US and Iran over the weekend, halting the sharp retreat in crude oil prices. In turn, banks underperformed as sovereign yields also rebounded in the session. The ECB forum in the coming days will see Governing Council members give hints on whether the central bank could deliver another rate hike this year, as the pullback in energy prices contrasts with the upward momentum for core inflation.