European stocks rise amid US rate cut speculation

European shares saw gains on Thursday, buoyed by optimism over potential US interest rate cuts following weak economic data, as the pan-European STOXX 600 index rose 0.4 per cent by 0816 GMT, driven by a 1.3 per cent increase in the automobiles and parts sector.

Leading the charge was German automotive supplier Continental, which surged 10.1 per cent to a three-week high, boosted by positive comments regarding its auto unit before market close.

In London, the FTSE 100 climbed 0.7 per cent as voting commenced in the UK, with polls predicting a significant Labour Party victory. Analysts noted that markets had largely priced in this outcome, minimising potential market impact.

French stocks advanced 0.6 per cent, marking a second consecutive day of gains amid efforts to counter the rise of France’s National Rally (RN).

Market sentiment was bolstered by weak US economic data, which fueled expectations of US interest rate cuts. Data showed an increase in first-time US unemployment benefit applications, suggesting a cooling labour market.

In economic news, German industrial orders unexpectedly fell by 1.6 per cent in May, adjusted for seasonal and calendar factors.

Individual stock movements included the UK’s Smith & Nephew rising 6.3 per cent after activist investor Cevian Capital disclosed a 5 per cent stake. Redcare Pharmacy surged 10.4 per cent following strong second-quarter sales results, while Roche fell 2.2 per cent after halting a lung cancer drug trial due to disappointing outcomes.

Elsewhere, Sweden’s Ericsson slipped 0.9 per cent after reporting an impairment charge of 11.4 billion Swedish crowns ($1.09 billion) in the second quarter of 2024.

Looking ahead, investors await comments from European Central Bank officials for insights into future interest rate policies. Trading volumes were anticipated to be low due to a public holiday in the United States.

Attribution: Reuters.