Germany’s DAX, France’s CAC, UK’s FTSE 100 gain on strong UK GDP data

European stock markets saw an uptick on Friday, buoyed by stronger-than-expected UK growth figures and growing optimism that the U.S. Federal Reserve may implement rate cuts.

Germany’s DAX index rose by 0.4%, France’s CAC 40 increased by 0.5%, and the UK’s FTSE 100 also climbed by 0.4%.

UK economy exits recession, spurring investor confidence

Adding to the positive market sentiment, the UK announced that its economy grew by 0.6% in the first quarter of 2024, surpassing the anticipated 0.4% and effectively pulling out of a recession that began in the latter half of the previous year.

Additionally, March saw a monthly growth rate of 0.4%, outpacing expectations of 0.1%.

Bank of England and ECB monetary policies under scrutiny

Despite the Bank of England maintaining interest rates at a 16-year high on Thursday, the decision included a split vote, with two out of nine members opting for a rate cut.

This has fueled speculations of a potential rate reduction in the upcoming months, with money market traders estimating a 45% chance of a cut at the next policy meeting.

Furthermore, about 58 basis points of easing are expected by year-end.

Investors are also keenly awaiting the European Central Bank’s latest monetary policy meeting account, which is anticipated to provide further insights into future rate cuts, especially after indications of a likely reduction in June.

Corporate sector shows robust growth, led by IAG and Mediobanca

In the corporate arena, shares of IAG surged 2% after the airline group reported a first-quarter operating profit of €68 million, a significant increase from €9 million in the same period last year.

IAG, the parent company of British Airways, Iberia, and Aer Lingus, also reported a sharp rise in revenue, positioning itself strongly for the upcoming peak summer travel season.

Similarly, Mediobanca’s shares climbed 3% following the announcement of a 42% increase in net profit for the January-March quarter on an annual basis, with plans to distribute an interim dividend of €421 million this month.

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