Positive European Market Trends Following Unchanged Policies by Bank of England and ECB, Alongside Fed Indications of Rate Cuts
European markets experienced a rebound on Thursday, with investors responding positively to the U.S. Federal Reserve's indication of upcoming interest rate reductions. The pan-European Stoxx 600 index concluded the day with a 0.9% increase, reaching its highest level since January 2022.
Mining stocks spearheaded the gains, surging by 3%, while nearly all sectors and major stock exchanges registered positive performance. However, insurance stocks deviated from the optimistic trajectory, declining by 1.8%.
On Wednesday, the Federal Open Market Committee decided to maintain interest rates within a range of 5.25% to 5.5%, aligning with the expectations of Wall Street. Market sentiment soared as policymakers outlined plans for at least three rate cuts in the coming year.
On Wall Street, the Dow reached a new record high, eliciting investor enthusiasm due to robust economic data. Meanwhile, Asia-Pacific equity markets experienced a rally led by Hong Kong stocks.
In Europe, investors shifted their attention towards monetary policy decisions from the European Central Bank and the Bank of England. Both central banks chose to maintain unchanged interest rates.
The biggest movers in the European market were AMS-Osram and Swedish investment firm EQT, with both experiencing gains of around 13%. AMS-Osram's stock received an upgrade from Jefferies, prompting the surge. Conversely, Italian banks faced significant declines as investors seized the opportunity to take profits following the Federal Reserve's indication of potential rate cuts.
During his first press conference since the full-scale invasion of Ukraine, Russian President Vladimir Putin stated that inflation in Russia could reach 8% by the end of the year. To combat rising prices and address the weakness of the ruble, the central bank has implemented rapid rate hikes.
In Norway, the central bank raised its interest rates by 25 basis points, bringing the main policy rate to 4.5%. The decision was influenced by persistently high inflation, despite signs of economic easing. The central bank anticipates maintaining the current policy rate for the foreseeable future.
The German DAX index surpassed the 17,000-point milestone for the first time, reaching a peak of 17,003.28 points. Although the German economy has faced challenges and is expected to contract this year, the index has seen a year-to-date increase of over 21%.
Noteworthy stock movements included AMS-Osram, which saw a 12% increase, and Vivendi, climbing 9% following the announcement of potential plans to break up into multiple listed entities.
European markets opened with a significant rally, responding positively to the Federal Reserve's dovish signal. The pan-European Stoxx 600 index surged by 1.6%, with mining stocks leading the gains by jumping 3.8%. All sectors and major stock exchanges traded in positive territory.
Following Argentina's 50% devaluation of its currency, Citi identified three stock opportunities. The devaluation was part of an economic plan introduced by President Javier Milei. Two Argentine companies listed in the U.S. experienced stock price increases of over 40% in anticipation of an economic turnaround.
