EUROPE’S main stock index climbed on Thursday, with healthcare and retail stocks leading the charge, while investors cheered growing prospects of interest rate cuts by major central banks and sifted through a wave of economic data globally.
The pan-European Stoxx 600 index closed 0.4 per cent higher, rising for the second day and closing at its highest level in this month.
The retail sector rose to the top, boosted by an 11 per cent jump in JD Sports after the British sportswear retailer reported an improvement in second-quarter underlying sales growth.
Swiss pharmaceutical company Siegfried Holding advanced 7 per cent after better-than-expected first-half results, while Biomerieux rose nearly 6 per cent after UBS initiated coverage of the French biotechnology stock with a “buy”.
The healthcare sector hit a record high, also thanks to a 2.4 per cent rise in Europe’s most valuable company by market value, Novo Nordisk.
With market participants broadly pricing in a 25-basis-point rate cut by both the Fed and the ECB in September, the occurrence of these could provide a fresh boost to risk assets globally.
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The European Central Bank’s July meeting minutes showed policymakers saw no urgency in cutting rates but hinted at a fresh discussion in September due to growth concerns.
Different data sets showed euro zone business activity had surprising strength in August, potentially weakening expectations for two more rate cuts from the ECB, while last quarter’s slowing negotiated wage growth bolstered the case for a September rate cut.
“While further ECB cuts are on the way – we see cuts in September and December this year – the broader path is likely to be gradual and subject to considerable uncertainty,” said Chris Hare, senior economist at HSBC.
Investors also awaited policymakers’ commentary at Jackson Hole this week, hoping that the world’s most influential central bank, the US Federal Reserve, will kick off its rate-cutting cycle next month.
Over in the US, weekly jobless claims ticked up but were steadying near levels consistent with gradual labour market cooling that should aid a September US rate cut.
As for other individual stocks, Deutsche Bank rose 4 per cent after announcing settlements with some plaintiffs in Postbank acquisition lawsuits.
Reinsurance company Swiss Re gained 4.5 per cent after results, while CTS Eventim surged 6 per cent after the German ticketing group raised its full-year earnings forecast.
Aegon fell 5.4 per cent after the Dutch insurer booked a charge of around US$400 million in the first half of 2024, while Danish hearing aid and audio solutions maker GN Store Nord dropped 9 per cent after second-quarter results miss. REUTERS
