European Markets Hold Steady Ahead of ECB Rate Decisions, SNB Lowers Rates by 50 bps

Bridgette Randall
12 Dec, 2024
London

Stock market indexes across Europe held steady ahead of the rate decision from the European Central Bank. 

The ECB is widely anticipated to lower its key lending rate by 25 basis points to 3%, its fourth consecutive rate cut. 

Meanwhile, investors are looking for a timetable for additional rate cuts over the next six months, and many market watchers are looking for at least four additional rate cuts of 25 basis points, bringing down the key rate to 2%. 

The Euro Area is grappling with a looming trade war with the U.S. and China, political uncertainty in France and Germany, and slowing business activities across several sectors. 

 

Switzerland Lowers Rates by 50 Basis Points, Steepest Decline in 10 Years

The Swiss National Bank lowered its key lending rate by a whopping 50 basis points to 0.5%, as the central bank battles strong currency and rising economic uncertainty. 

The central bank lowered its rate for the fourth consecutive meeting in a row and dropped the rates by the largest amount in ten years, bringing borrowing costs to the lowest level since November 2022. 

The Swiss economy is highly dependent on goods and services exports, and the stronger currency has become a headwind for many exporters. 

Policymakers also weighed annual economic growth of less than one percent against the rising geopolitical tensions and weakening demand growth outlook for the nation's premium goods. 

 

Europe Indexes and Yields

The DAX index increased by 0.03% to 20,405.54; the CAC-40 index rose by 0.006% to 7,423.61; and the FTSE 100 index inched higher by 0.3% to 8,322.21.

The yield on 10-year German bonds edged higher to 2.15%, French bonds inched up to 2.90%, the UK gilts increased to 4.35%, and Italian bonds increased to 3.24%.

The euro edged higher to $1.05; the British pound inched up to $1.27; and the U.S. dollar eased to 88.66 Swiss cents.

Brent crude decreased $0.14 to $73.37 a barrel, and the Dutch TTF natural gas rose by €1.40 to €43.33 per MWh. 

 

Europe Stock Movers

Mining companies advanced after China's political leaders agreed to increase the fiscal deficit ratio and issue new bonds to finance fiscal stimulus. 

Antofagasta declined 1% to 1,745.0 pence, Anglo American edged up 0.1%, and Glencore dropped 0.3% to 382.0 pence. 

Bodycote PLC jumped 0.8% to 669.27 pence after the thermal processing services provider expanded its stock repurchase plan by £30 million to £90 million. 

SThree Plc plunged 22% to 279.25 pence after the specialist recruitment company estimated a sharp decline in profits. 

Net fees for the fiscal year ending in November dropped 9% to £369.1 million, driven by a 7% fall in the contract segment, which represents 84% of net fees. 

The annual revenue in the UK, U.S., and Germany declined between 12% and 14%. 

The contract order book plunged 10% to £161 million. 

The company estimated fiscal 2025 pre-tax profit to hover around £25 million, including a one-time charge of £7 million related to cost-cutting efforts.

Curry PLC advanced 13.5% to 89.74 pence after the electronics retailer reported a narrower loss in the first half, and the company reiterated its annual outlook. 

Revenue in the first half increased 1% to £3.9 billion, net loss shrank to 8 million from 39 million, and diluted loss per share eased to 0.7 pence from 3.3 pence a year earlier. 

"Trading during the six weeks since the period end has remained in line with the Board's expectations, and the Group expects to see growth in profits and free cash flow for the year," according to the company's trading update released to investors.