PARIS: Europe’s main equity index hit an all-time high on Wednesday, boosted by tech and financial shares, while investors took stock of Federal Reserve Chair Jerome Powell’s Congressional testimony a day before the European Central Bank’s policy decision.
The pan-European STOXX 600 index climbed 0.4%, with Italy’s FTSE MIB index also hitting a record high.
The STOXX 600 has been on a record-breaking rally this year, inching closer to the 500-point mark, driven by investors piling into technology stocks amid the Artificial Intelligence (AI) mania, a somewhat resilient earnings season and market faith in early rate cuts.
The ECB’s policy decision on Thursday is at the top of investors’ radar, with the central bank widely seen holding rates steady.
In the United States, the Fed’s Powell cautioned that continued progress on lowering inflation “is not assured” but said rate cuts remain on the table for later this year.
“We’ll likely see downward revisions in the ECB’s near-term inflation projections,” said Maximilian Kunkel, chief investment officer, Global Family & Institutional Wealth at UBS.
“However, the ECB will continue to put more emphasis on wage growth to gain a clearer picture of the medium-term inflation outlook. The development in wage growth so far would argue against a cut in spring.”
Tech shares rose 1.4% tracking gains in US counterparts, while financials climbed 1%, with London Stock Exchange Group adding 2.3% after a consortium of investors sold about $2.41 billion in the bourse owner.
Swedish private equity firm EQT jumped 8.3%. Its skin care company Galderma plans to raise about $2.3 billion in a flotation on the Swiss stock exchange later this month, in what could be one of the biggest European IPOs this year.
Chemicals advanced 1.3% after Symrise jumped 6.6% as the German flavour and fragrance maker expects 2024 core profit margin to grow to 20%.
French reinsurer Scor jumped 8.2% after solid results for 2023.
Irish bank AIB Group gained 5% on plans to boost shareholder returns more than four-fold, while Belgian auto distributor D’Ieteren climbed 6.7% following a “nice set” of full-year results.
Grifols slumped 11.3% following a new Gotham City Research report questioning the Spanish drugmaker’s “transparency, integrity and ethical conduct”.
German logistics giant DHL Group dropped 6.3% on warning of weak demand in the first half of this year.
Of the STOXX 600 that have reported fourth-quarter earnings to date, 51% exceeded estimates, below the typical 54% beat rate, LSEG data showed on Tuesday.
Meanwhile, data showed the euro zone’s January retail sales fell by a less-than-expected 1% year-on-year.
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