European stocks closed on a firm note on Thursday with investors reacting positively to the monetary policy announcements from the Federal Reserve, the Bank of England and the European Central Bank.
The Fed left its benchmark rate unchanged as expected on Wednesday, and hinted at three interest rate cuts next year.
The ECB’s Governing Council, led by ECB President Christine Lagarde, held the main refinancing rate, or refi, at 4.5% on Thursday, in the final rate-setting session this year. The deposit facility rate was kept at a record high 4% and the lending rate was held at 4.75%.
“Based on its current assessment, the Governing Council considers that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal,” the ECB said. “The Governing Council’s future decisions will ensure that its policy rates will be set at sufficiently restrictive levels for as long as necessary.”
The ECB lowered its inflation projections for this year and next.
The BoE left its benchmark rate unchanged at a 15-year high for the third straight time and retained its hawkish bias in contrast to the stance of its peer U.S. Federal Reserve that hinted at three rate cuts next year.
The Swiss Central Bank also left its interest rate unchanged, while the Norges Bank raised its policy rate from 4.25% to 4.5%.
The BoE’s announcement was arguably more notable despite offering no forecasts and there being no press conference after. The voting was unchanged from the last meeting, with three policymakers backing a rate hike, very much running counter to the message from the Fed last night,” says Craig Erlam, Senior Market Analyst at OANDA, UK & EMEA.
“Perhaps armed with new projections in February the message from the BoE will be very different but at this moment, that was rather more hawkish than many will have expected,” he adds.
The pan European Stoxx 600 climbed 0.87%. The U.K.’s FTSE 100 gained 1.33%, France’s CAC 40 ended 0.59% up, and the U.K.’s FTSE 100 edged down 0.08%. Switzerland’s SMI ended higher by 0.19%.
Among other markets in Austria, Belgium, Finland, Iceland, Norway, Poland, Portugal, Spain, Sweden and Turkiye ended with sharp to moderate gains.
Denmark, Greece and Netherlands closed modestly higher, while Russia ended weak.
In the UK market, Ashtead Group, Entain, Croda International, Anglo American Plc, British Land Company, Kingfisher and Land Securities climbed 6.6 to 9%.
Barclays Group, Just Eat Takeaway.com, Spirax-Sarco Engineering, Persimmon, Segro, Schrodders, Hargreaves Lansdown, Carnival, Burberry Group, WPP, Antofagasta, Glencore, Smurfit Kappa Group, ITV and Phoneix Holdings surged 4 to 5%.
Frenillo, Natwest Group, Lloyds Banking Group, Barratt Developments, TUI, British American Tobacco, Rio Tinto, JD Sports Fashion, Standard Chartered, Royal Mail, IHG and Easyjet also ended sharply higher.
B&M European Value Retail dropped more than 6%. Relx and Admiral Group lost about 3.6% and 3%, respectively. Centrica, BAE Systems, Associated British Foods, Pearson, The Sage Group, Severn Trent and Unilever also ended sharply lower.
In the German market, Siemens Energy soared nearly 9%. Zalando gained 8.4%, while Vonovia and Sartorius climbed about 7.8% and 6.8%, respectively.
Daimler Truck Holding, Continental, Merck, Infineon, Puma, Mercedes-Benz, Fresenius Medical Care, BMW, RWE and Siemens gained 2 to 3.6%.
Bayer gained about 2.7% after it announced a collaboration with Iktos to expand the use of AI in the discovery and development of new sustainable crop protection products.
Evotec climbed nearly 11%. The life science company partnered with Charité – Universitätsmedizin Berlin, one of the largest university hospitals in Europe, to create a molecular patient database for ANCA-associated vasculitis.
In Paris, Alstom rallied more than 8%, Renault surged 6.6% and Unibail Rodamco gained about 6.2%. Media giant Vivendi soared 10% after revealing a plan to split its businesses.
Saint Gobain, Eurofins Scientific, Kering, Teleperformance, Pernod Ricard, BNP Paribas, ArcelorMittal, Societe Generale, Veolia, STMicroElectronics, WorldLine, Credit Agricole and Legrand gained 2 to 6%.
Safran, Thales, Air Liquide, AXA, Danone, Airbus Group, Dassault Systemes and Orange lost 1 to 2.8%.
Market Analysis
European Stocks Close On Firm Note After Central Banks’ Policy Moves
2023-12-14 17:47:59
