German stocks lead gains in Europe, all eyes on central bank meetings

Germany’s DAX index led gains among its European peers on Monday boosted by Adidas (ETR:ADSGN) shares after an analyst upgrade, while investor focus was largely on major central bank policy meetings scheduled through the week.

The pan-European STOXX 600 index rose 0.5%, with the DAX up 1%.

German sportswear maker Adidas jumped 5.2% to the top of DAX after Bernstein raised its rating on the stock to “outperform” from “market perform”, as it expects factors such as the return of Chinese influencers and Lionel Messi’s move to Inter Miami to benefit the brand.

Meetings from the U.S. Federal Reserve, the European Central Bank and the Bank of Japan are lined up for the week.

The Fed is seen holding rates steady at the end of its two-day policy meeting on Wednesday, while the ECB is expected to hike interest rates by another quarter percentage point on Thursday to tame stubborn inflation.

“The ECB has picked up momentum in the last three months or so, but up until then it was sticking to more conservative hikes,” said Daniela Hathorn, senior market analyst at Capital.com, noting the ECB was cautious at the beginning of the year amid a recession risk in Europe triggered by the energy crisis.

“Whereas we’ve seen the Fed being a lot more stern and aggressive from the beginning. I think the comments from Powell and whether he sees this as a hawkish pause or a dovish pause is where we will see a lot of the momentum come from.”

The STOXX 600 started the year on a stronger footing compared to the S&P 500 index but it lost steam during the second quarter due to a rise in preference for growth-oriented stocks as opposed to value stocks.

The mega-cap heavy U.S. index is up 4.6% in the current quarter compared to a small 1% rise in the European benchmark.

Novartis rose 0.6% after it said it has agreed to acquire Seattle-based biotech firm Chinook Therapeutics for up to $3.5 billion.

The European healthcare sector index was up 0.4%, while the personal & household sector index led gains with a 1.2% rise.

Shares in SES tumbled 9.2% to the bottom of the STOXX 600 after the satellite company announced its chief executive Steve Collar would step down.

German stocks lead gains in Europe, all eyes on central bank meetings