Frankfurt stock market - Dax increases - market participants anticipate ECB rate reduction
Initially, European stock markets followed the late Friday surge on the New York Stock Exchange. This was primarily driven by the tech stocks in the Nasdaq, which received a boost from latest reports on chipmakers Nvidia and AMD due to the hot topic of artificial intelligence (AI). Market indices like the S&P 500 had already brushed off initial worries of profitability with AI by the weekend.
Throughout the week, there was much focus on the potential interest rate cut by the European Central Bank (ECB). Analysts at DZ Bank noted that failing to do so would be a major letdown for market participants and severely impact the central bank's credibility. No conflicting economic data emerged during this time. In fact, the manufacturing sentiment in the eurozone's industrial sector hit a 14-month high in May, supporting the notion of an impending rate cut on Thursday.
