EUROPE’S main index leapt on Thursday, after the European Central Bank kept rates steady on signs of cooling inflation and as Novo Nordisk hit a record peak on encouraging trial data of its experimental obesity drug.
The pan-European Stoxx 600 hit an all-time high, closing 1.1 per cent higher, with the rate-sensitive technology sector climbing 2.3 per cent to a December 2000 peak.
Reflecting upbeat sentiment across major blocs were benchmark indexes in Germany, France, Italy and Spain scaling all-time highs.
Euro area bond yields also fell, with markets pricing in more than 100 basis points of rate cuts in 2024 from 92 bps before the decision.
Leaving interest rates unchanged at 4.0 per cent, the ECB tweaked its messaging slightly to reflect falling inflation over the past 1-1/2 years and new, lower economic projections.
“Equities responded to the lower inflation projections, but people also wanted to hear (ECB chief Christine) Lagarde say that the ECB was open to cutting rates as early as April, if the data supported, but she was very adamant about the need to wait until June,” said Thierry Wizman, global FX and rates strategist at Macquarie.
“The ECB significantly reduced the 2024 inflation projection. Symbolically important was the 2025 reduction, which implies that the 2 per cent inflation target will be reached by next year.”
Most market participants expect the ECB will kick off policy easing among major central banks, with the Federal Reserve widely seen cutting in June.
The Stoxx 600 has rallied this year, holding bumper gains from 2023, aided by somewhat resilient earnings and early rate-cut hopes. Tech stocks have been at the forefront of a buying spree as AI euphoria continues.
Novo Nordisk soared 8.3 per cent after early trial data for its experimental obesity drug Amycretin showed a higher weight loss compared with its popular Wegovy treatment.
The healthcare sector rose 2.3 per cent, with Denmark-based Zealand Pharma, which saw BTIG initiate coverage with a “buy” rating, climbing 9.3 per cent.
Virgin Money UK surged 35 per cent on Britain’s Nationwide Building Society’s buyout plans in a potential £2.9 billion (S$3.9 billion) all-cash deal.
HSBC lost 3.5 per cent on trading ex-dividend. Further, global banking regulators proposed measures to crack down on “unacceptable” attempts by the biggest banks to game rules in a bid to avoid heavier capital requirements.
Telecom Italia plunged 23.8 per cent after unveiling a three-year outlook under a new structure stemming from its planned network sale, with analysts citing enduring concerns over the debt level.
Call-centre operator Teleperformance slumped 23.1 per cent after forecasting limited 2024 growth.
German fashion house Hugo Boss dropped 13.8 per cent after warning of much slower sales growth this year and forecasting downbeat profit. REUTERS
