European stocks closed higher on Monday, as investor concerns regarding inflation and interest rates diminished. This positive sentiment was largely attributed to a drop in oil prices, following US President Donald Trump's decision to cancel further military strikes and express optimism about negotiations to end ongoing conflict and resolve issues concerning the Strait of Hormuz. Easing worries about AI infrastructure spending also contributed to the market's positive mood.
The pan-European Stoxx 600 index rose by 0.45%. Germany's DAX saw a significant gain of 1.45%, and France's CAC 40 increased by 1.22%. The UK's FTSE 100, however, edged down by 0.1%, while Switzerland's SMI gained 0.18%. Brent crude futures initially fell to $81.55 a barrel before recovering slightly to $83.90, still representing a more than 4.5% decline from the previous close.
Several companies saw notable gains. In the UK, Barratt Redrow, Metlen Energy & Metals, Rentokil Initial, Smith & Nephew, ICG, and St. James's Place climbed 3%-4%. Siemens Healthineers surged over 6% in Germany, and Stabilus rallied nearly 5% after reporting a sharp rise in third-quarter net profit. In contrast, AstraZeneca tanked nearly 9% amid reports of potential merger discussions with Bristol Myers Squibb, and IG Group Holdings shed 4.1%. Strong manufacturing activity data also bolstered confidence, with the Euro area's Purchasing Managers' Index (PMI) reaching 51.9 in July, signaling the strongest improvement in factory operating conditions since April.
