European Markets Jumped 1% Ahead of Widely Anticipated Rate Cut

Bridgette Randall
12 Sep, 2024
London

European markets rebounded and erased previous two sessions' losses ahead of the widely anticipated interest rate cuts later in the day. 

Benchmark indexes in Paris, London, and Frankfurt gained around 1%, and investors awaited the release of monetary policy decisions and economic projections from the European Central Bank. 

Investors also looked ahead to comments from ECB President Christine Lagarde to gain insights into the rate path and possible additional rate cuts later in the year. 

ECB President Lagarde is scheduled to deliver her comments at 2:45 p.m. Frankfurt time, which could sway trading as the session progresses. 

Inflation in the currency union has declined over the last nine months, but the core rate of inflation is still well above the central bank's target rate of 2%. 

Moreover, the service sector inflation, still above 3%, has become one of the key drivers of inflation in the currency union and failed to budge over the last few months. 

 

Europe Indexes and Yields

The DAX index increased by 1.2% to 18,556.29; the CAC-40 index rose by 0.9% to 7,461.77; and the FTSE 100 index rose by 0.8% to 8,256.42. 

The yield on 10-year German bonds edged lower to 2.12%, French bonds inched lower to 2.82%, the UK gilts edged down to 3.78%, and Italian bonds increased to 3.53%.

The euro edged down to $1.10; the British pound inched higher to $1.30; and the U.S. dollar gained to 85.40 Swiss cents.

Brent crude increased $1.06 to $71.67 a barrel, and the Dutch TTF natural gas fell by €0.62 to €35.54 per MWh. 

 

Europe Stock Movers

Technology stocks soared in Thursday's trading following a rally in the sector in overnight trading in New York, which also lifted tech-heavy markets in Asia. 

ASML jumped 4.3% to €727.80, BE Semiconductor gained 5.3% to €113.20, Infineon Technologies increased 2.9% to €29.72, and STMicroelectronics inched higher 1.2% to €25.75. 

Roche Holding declined 2.9% to CHF 261.30 on reports that the Swiss drugmaker's early-stage trial for an obesity drug showed a high rate of temporary side effects. 

Santhera Pharmaceuticals decreased 5.2% to CHF 9.22 after the Swiss drug maker posted a first-half loss of CHF 15.3 million. 

Nordex SE advanced 1.5% to €14.31 after the German windmill maker won an order from the Danish renewable energy company Orsted for its 43 MW Farranrory windfarm in Ireland. 

Banks in London edged higher after the Bank of England, bowing to pressure from local banks, delayed and watered down its banking capital requirement proposal for the second time in less than a year.

Barclays PLC increased 2.1% to 219.80 pence, HSBC Holdings jumped 1.8% to 660.70 pence, Lloyds Banking increased 1.1% to 58.08 pence, and Standard Chartered 765.60 pence. 

The Bank of England delayed its increase in tier-1 capital by less than one percentage point to January 2030, down from its previous announcement of three percentage points in December and six percentage points in the earlier directive. 

IG Group Holdings plc increased 8% to 967.50 pence, and the online trading firm reported an increase in revenue in its fiscal first quarter. 

Trainline PLC jumped 8.7% to 326.40 pence after the online rail ticketing app reported strong first-half results and lifted its annual profit estimate.