European shares rise after Swiss rate cut

21 Jun, 2024

PARIS: European shares advanced on Thursday with broad-based gains as markets tracked a global upbeat sentiment, while shares of British, Swiss and Norwegian stocks were in focus after their respective central bank decisions.

The pan-European STOXX 600 ended up 0.9% to hit a week’s high, led by a 1.8% rise in technology stocks, while real estate stocks were another boost, rising 1.7%.

Lifting the tech index was ASM International (ASMI), which jumped 5.3% after Morgan Stanley upgraded the semiconductor equipment manufacturer to “overweight” from “equal-weight”.

Global sentiment also received a lift as US equities extended their gains on the back of chip designer Nvidia , and as investors parsed interest rate decisions from three central banks in Europe. Switzerland’s benchmark index gained nearly 0.6% after the Swiss National Bank cut interest rates by 25 basis points to 1.25%, maintaining its position as a front-runner in the global policy easing cycle.

“The surprise cut to rates, the second cut since March, was justified by a fall in inflation. However, this move was designed to impact the FX market,” said Kathleen Brooks, research director at XTB.

“The risk is that a strong currency causes deflation and weighs on exports.” Norway’s central bank, on the other hand, opted to hold its key policy interest rate at a 16-year high of 4.50% and said a cut was expected in 2025. Norwegian stocks added 0.4%.

The UK’s FTSE 100 advanced 0.8% after the Bank of England kept its main interest rate unchanged, but the prospect of a future rate cut moved closer as some policymakers said their thinking was now “finely balanced”.

On the data front, German producer prices fell slightly more than expected in May, while flash estimates showed consumer confidence in the euro zone rose by 0.3% in June.

Evotec jumped 13.9% to the top of STOXX 600 after a media report that the German biotech firm is speaking to advisers after it was seen as a potential takeover target.

Millennium BPC rose 8.3% after Jefferies upgraded the Portuguese bank’s rating to “buy”.

Danone fell 2.5% after the French food group effectively gave no guidance upgrade in its medium-term targets as it plans expansion into health and medical nutrition.

The stock bottomed France’s CAC 40 index, which jumped 1.3%.

Tate & Lyle dropped 9% after the British food ingredients maker said it will buy US-based CP Kelco for $1.8 billion from J.M. Huber Corp. Its shares were trading ex-dividend.

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