The good mood does not leave buyers of shares and European indices are going up. On the currency market, investors are waiting for the Bank of England's decision on interest rates.
European stocks are trading in the green on Thursday. Germany's DAX appears to be gaining 0.8 percent, and other major indices in Europe are up 0.3 percent. (in the case of the British FTSE 100) to 1.6 percent. (in the case of Italy's FTSE MIB).
Investors have been focused on the outlook for strong economic growth and continued soft monetary policy by the European Central Bank, as its officials assured this week.
EU's largest economy accelerates
We learned data on the business climate. In June, the Ifo for Germany rose 2.6 percent from the previous month to 101.8 points, its highest level since November 2018. Europe's largest economy appears to be gaining momentum after the easing of restrictions on epidemics. Companies rated their current business situation as much better, and optimism about the second half of the year also increased.
In the services sector, the index rose to 22.4 points, the highest value since May 2019, as both indicators of the current situation and expectations rose sharply. And in the trade sector, the index jumped to 17.8 points, the highest value since February 2018, due to a marked improvement in current activity. Sentiment among manufacturers also improved to a more than three-year high.
When will the BoE change rates?
The Bank of England is expected to leave its key interest rate at a record low of 0.1 percent in June and bond purchases at £3.4 billion per week. But investors expect policymakers to give more clues about the economic outlook and confirm that inflation is rising and the GDP rebound is much stronger than expected.
Pressure is growing for the central bank to do something and change its rhetoric on inflation, especially after the Fed's hawkish shift last week. Still, the Bank of England is likely to maintain its current stance until at least August.
June was also the last meeting of Andy Haldane, the bank's chief economist, who warned that inflation threatened to overheat the British economy. So the Bank of England may be one of the more hawkish central banks in the near future, as inflation expectations in the UK are higher than those in the US or the Eurozone.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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