European stocks higher to kick off the week

Stocks in Europe started the week in positive territory, with the STOXX 50 gaining 0.6% and the broader STOXX 600 advancing 0.3%.

The upbeat tone was supported by continued optimism that the U.S. Federal Reserve will deliver its first interest rate cut of the cycle later this month, providing a tailwind to global risk assets. Market sentiment, however, remained cautious as investors weighed political and monetary risks on the continent.

In France, attention is firmly on Prime Minister François Bayrou, who is widely expected to lose a parliamentary confidence vote today. Such an outcome would deepen political uncertainty and raise questions about the stability of President Emmanuel Macron’s government at a time when fiscal reforms and budget negotiations are already under scrutiny. The prospect of renewed political turbulence has left French government bonds and equities more volatile in recent sessions.

Meanwhile, the European Central Bank meets later this week to set monetary policy. While no change in interest rates is anticipated, the Governing Council’s assessment of growth and inflation prospects will be closely watched for clues on whether the ECB may move in step with the Fed later this year. Traders are particularly focused on updated staff projections and any signals about how long rates are likely to remain at restrictive levels.

On the corporate front, European tech stocks provided a boost to the indices. Shares in ASML rose more than 1% after reports that the semiconductor equipment maker is set to become the largest shareholder in French artificial intelligence startup Mistral AI—a move seen as part of broader efforts to strengthen European technology sovereignty in the face of global competition. Other heavyweights also advanced, with SAP up 0.8% and Siemens posting modest gains, helping to lift sentiment across the region’s industrial and tech sectors.