European Stocks Close On Firm Note After ECB Cuts Interest Rate

(RTTNews) - European stocks closed on a firm note on Thursday, after the European Central Bank cut interest rate for the first time since September 2019. Expectations of an interest rate cut by the Federal Reserve in September also helped underpin sentiment.

The European Central Bank (ECB) has cut interest rate for the first time since September 2019. The ECB today cut key interest rate by 25 basis points, and has raised inflation forecasts for 2024 and 2025.

The ECB has raised the headline inflation outlook for 2024 to 2.5% from 2.3% previously, and upped the forecast for 2025 to 2.2% from 2%.

The pan European Stoxx 600 climbed 0.66%. The U.K.'s FTSE 100 gained 0.47%, Germany's DAX ended 0.41% up, and France's CAC 40 ended higher by 0.42%. Switzerland's SMI advanced 0.75%.

Among other markets in Europe, Austria, Belgium, Denmark, Greece, Netherlands, Norway, Poland and Spain ended higher.

Finland, Portugal, Russia and Turkiye closed weak, while Iceland ended flat.

In the UK market, Antofagasta, Fresnillo, Sage Group, Diageo, Natwest Group, St. James's Place, Rio Tinto, Barclays Group, Lloyds Banking Group, Legal & General, Anglo American Plc, Glencore, Prudential, Burberry Group, JD Sports Fashion and RS Group gained 1.3 to 3%.

Vodafone Group ended down by about 5.7%. National Grid lost 4.1%. WPP, Easyjet, Sainsbury (J), B&M European Value Retail, Smith (DS), Smurfit Kappa Group, Howden Joinery and Informa ended lower by 1 to 3.5%.

In the German market, SAP rallied more than 3.5%. Commerzbank climbed about 3.1% and Fresenius gained nearly 2.5%. Deutsche Bank, Sartorius, Hannover Rueck, Daimler Truck Holding, Munich RE, Puma and Deutsche Post gained 1 to 2%.

Siemens Energy lost about 3%. Vonovia, Covestro, Siemens, Infineon and RWE also ended notably lower.

In the French market, Edenred jumped nearly 5%. STMicroElectronics, Thales, LVMH and Veolia 1 to 2.3%.

Eurofins Scientific, Unibail Rodamco, Renault, Orange and Safran closed weak.

In economic news, Germany's factory orders fell unexpectedly in April, dropping by 0.2% month-on-month, confounding expectations for an increase of 0.3%. Nonetheless, this was slower than the revised 0.8% fall posted in March.

Germany's construction sector remained deep in the contraction zone in May on sharp falls in total industry activity and new orders, the latest HCOB survey compiled by S&P Global showed. The construction Purchasing Managers' Index posted 38.5 in May, up from 37.5 in April.

The UK construction sector logged its fastest growth in two years in May with activity and new orders increasing at sharper rates, survey results from S&P Global showed. The construction Purchasing Managers' Index rose unexpectedly to 54.7 in May from 53.0 in April. The reading was forecast to fall to 52.5.

Investors now look ahead to Friday's closely watched monthly jobs report from the U.S., which could have a significant impact on the outlook for interest rates.

The Labor Department report is expected to show employment increased by 185,000 jobs in May after climbing by 175,000 jobs in April, while the unemployment rate is expected to remain at 3.9%.