European Shares Rally As China Pledges More Stimulus

European stocks bounced back on Thursday, after having snapped a two-day winning streak the previous day.

Sentiment was underpinned by expectations of another big U.S. interest rate cut this year and optimism over fresh stimulus measures from China.

Meanwhile, the Swiss National Bank reduced its key policy rate by 25 basis points for the third straight meeting and signaled that further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term.

In economic releases, survey data published jointly by GfK and the Nuremberg Institute for Market Decisions showed that German consumer confidence will recover moderately in October despite weaker economic outlook.

The forward-looking consumer sentiment index rose to -21.2 in October from -21.9 in September. The score was forecast to fall to -22.4.

Elsewhere, the latest British Retail Consortium (BRC) Consumer Sentiment Monitor has revealed that U.K. consumer confidence has fallen in September due to concerns about both the economy and personal finances.

The pan-European STOXX 600 rallied 1.1 percent to 524.63 after falling 0.1 percent on Wednesday.

The German DAX climbed 1.2 percent, France’s CAC 40 surged 1.4 percent and the U.K.’s FTSE 100 was up 0.3 percent.

Shares of Hennes & Mauritz AB fell 3.4 percent in Stockholm after the Swedish clothing major reported weak profit and sales in its third quarter.

Miners Anglo American, Antofagasta and Glencore jumped 4-5 percent in London after China’s politburo pledged strong policy support to meet this year’s economic growth target of roughly 5 percent.

China-linked LVMH, Hermes International and Kering soared 6-7 percent in Paris.

Energy stocks traded weak, with BP plc falling 4.1 percent and Shell losing 3.5 percent as oil extended losses for a second day running following reports that Saudi Arabia was committed to increasing output in December.

German chemicals giant BASF declined 3 percent after announcing a reduction in its dividend.

Sportswear maker PUMA soared 3.4 percent as it announced the appointment of Markus Neubrand, aged 48, as its Chief Financial Officer and a Board member.

Lender Commerzbank surged 5.6 percent. The bank, which is the takeover target of Italian lender UniCredit SpA, confirmed its strategy, expecting higher net profit and return on equity by 2027.

SMA Solar Technology AG shares rose 4.3 percent. The solar energy equipment supplier said that it has decided to initiate a company-wide restructuring and transformation program aimed at increasing efficiency and strategic focusing.

Evotec jumped 5.2 percent after the drug and development company entered into a technology development partnership with Novo Nordisk.

Market Analysis