ARM, BIRK, STLA: European Stocks Rise as Inflation Falls Below Central Bank’s Target

European stock such as Arm Holdings (ARM), Birkenstock (BIRK), and Stellantis (STLA) are marching higher on news that inflation on the continent fell to an annualized 1.9%, which is below the European Central Bank’s (ECB) 2% target.

Statistics agency Eurostat attributed the 1.9% inflation reading for May to a steep decline in prices for services. Economists polled by Reuters (TSE:TRI) had expected the May reading to come in at 2%, compared to April’s 2.2% annualized figure.

Services inflation fell to 3.2% in May, down from 4% in April. Core inflation, which excludes energy, food, tobacco and alcohol prices, eased to 2.3% in May from 2.7% the previous month. Inflation has been steadily declining across Europe in recent months amid continued uncertainty for the European economy.

Interest Rate Moves

The latest data will be considered by the European Central Bank as it makes its next interest rate decision on June 5. The central bank’s benchmark interest rate, known as the “deposit facility rate,” is currently at 2.25%, down from a peak of 4% in 2023.

Futures traders are betting 95% that the European Central Bank will make a 25-basis point interest rate cut at its policy meeting on June 5. The Euro currency weakened 0.3% against the U.S. dollar following news of the May inflation reading. However, stocks are trending higher on the news and prospect of lower interest rates, which is positive for businesses.

Is ARM Stock a Buy?

The stock of Arm Holdings has a consensus Moderate Buy rating among 19 Wall Street analysts. That rating is based on 15 Buy, three Hold, and one Sell recommendations issued in the last three months. The average ARM price target of $146.80 implies 12.83% upside from current levels.

Read more analyst ratings on ARM stock