European Indexes Jump 1% Tracking Higher Global Markets

Bridgette Randall
26 Sep, 2024
London

European markets advanced following the rise in global markets after China announced strong monetary stimulus. 

Benchmark indexes in Paris, London, and Frankfurt jumped as much as 1.5% after China's Politburo pledged to provide additional stimulus to meet an economic growth target of 5% in the current year. 

Chinese authorities are considering injecting as much as one trillion yuan in the state-controlled banks, the largest injection since 2008. 

In addition, Chinese authorities are considering providing direct cash assistance to as many as 25% of the population, which could increase consumption of basic items. 

Global tech stocks advanced after Micron Technology estimated higher sales and earnings, providing another upward push to semiconductor-related stocks in Europe, Japan, and South Korea. 

Closer to home, the Swiss National Bank lowered its policy rate by 25 basis points to 1.0%, a third consecutive decrease in rates, and the cost of borrowing dropped to the lowest since early 2023. 

The central bank noted that policymakers are prepared to lower rates in the coming quarters, if necessary, citing a weakening inflation outlook. 

The Swiss National Bank lowered its inflation outlook to 1.2% from 1.3% in 2024, 0.6% from 1.1% in 2025, and 0.7% from 1.0% in 2026. 

The central bank left its gross domestic product growth estimate at around 1% in 2024 and 1.5% in 2025. 

Bank lending to households increased 0.6% to Є6.891 trillion in August, accelerating from 0.5% in the previous month, the European Central Bank reported Tuesday. 

The increase in lending to households was the fastest since October 2023, amid a slight pick up in consumer demand. 

Meanwhile, lending to corporations increased by 0.8% to Є5.133 trillion, a faster increase than in July. 

Overall lending to the private sector, including households and non-financial corporations, increased by 1.6% from 1.3% in the previous month. 

 

Europe Indexes and Yields

The DAX index increased by 1.1% to 19,129.17; the CAC-40 index rose by 1.5% to 7,677.44; and the FTSE 100 index rose by 0.2% to 8,285.97. 

The yield on 10-year German bonds edged lower to 2.14%, French bonds inched lower to 2.94%, the UK gilts edged up to 3.99%, and Italian bonds decreased to 3.45%.

The euro edged lower to $1.11; the British pound inched higher to $1.33; and the U.S. dollar weakened to 84.72 Swiss cents.

Brent crude decreased $1.82 to $71.63 a barrel, and the Dutch TTF natural gas fell by €0.65 to €36.91 per MWh. 

 

Europe Stock Movers

H&M Mennes & Mauritz AB dropped 4.5% to SEK 174.10 after the Swedish apparel retailer reported weaker-than-expected fiscal third quarter results. 

China-linked companies in Europe advanced after Chinese leaders pledged additional support to meet the annual economic growth target rate of 5%. 

Vehicle makers, luxury goods purveyors, and mining companies advanced for the third session in a row. 

Antofagasta gained 5.7% to 2,030.0 pence, Anglo American jumped 5.9% to 2,434.0 pence, and Glencore increased 4.8% to 422.75 pence. 

LVMH soared 7.4% to €663.50, Hermes International SCA added 7.2% to €2,178.0, Kering SA advanced 8.2% to €247.80, Richemont SA jumped 5.6% to CHF 129.40, Moncler SpA increased 6.6% to €52.08, and Prada gained 2.4% to €6.18. 

Puma SE increased 4.3% to €38.45 after the athletic footwear maker appointed Markus Neubrand as the company's chief financial officer and a board member. 

Commerzbank AG increased 5.3% to €16.17 after the German lender estimated higher profit and return on equity by 2027.

BASF SE decreased 2.2% to €44.33 after the German chemical company announced its plans to lower its fiscal year 2024 dividend to at least €2.25 per share, payable in 2025. 

The revised dividend is a decrease from the €3.40 per share dividend paid in 2023. 

The German chemical company plans to distribute €12 billion between 2025 and 2028, including €8 billion of stock buybacks and €2 billion of dividend payments, the company said in a statement. 

The company also estimated cumulative dividends to exceed €12 billion in the period between 2025 and 2028 and return on capital to reach 10% by 2028.

SMA Solar Technology AG increased 2.2% to €17.48 after the German company announced a companywide restructuring to increase efficiency, sharpen strategic focus, and lower operating costs.