Published by Global Banking and Finance Review
Posted on January 30, 2025
(Reuters) - Europe's benchmark index scaled a record high on Thursday, led by real estate and technology stocks, while investors awaited a likely interest rate cut at the European Central Bank's monetary policy verdict.
The pan-European STOXX 600 index was up 0.5%, on track for its third consecutive session of record gains. German blue-chip index rose 0.3%, also hitting an all-time high.
A potential 25 basis points cut by the ECB-POLICY-KAZIMIR-00b06d9b-4b99-46ce-a2aa-458d8eb2d993>ECB-POLICY-SOURCES-e4bab80d-7aeb-4e49-a29a-ce14e1595c6d>ECB-POLICY-KAZIMIR-00b06d9b-4b99-46ce-a2aa-458d8eb2d993>ECB-POLICY-CENTENO-a52f21b9-8975-4dc5-9a21-8c5e8267aa43>ECB-POLICY-KAZIMIR-00b06d9b-4b99-46ce-a2aa-458d8eb2d993>ECB-POLICY-SOURCES-e4bab80d-7aeb-4e49-a29a-ce14e1595c6d>ECB-POLICY-KAZIMIR-00b06d9b-4b99-46ce-a2aa-458d8eb2d993>ECB would reduce the deposit rate to 2.75%, its lowest level since early 2023. The decision would also contrast the U.S. Federal Reserve's verdict on Wednesday to leave rates unchanged.
"We're now starting to see potential weakness in the U.S. exceptionalism rhetoric that's been driving a lot of the momentum and I think Europe has been taking advantage of that as well," said Daniela Hathorn, senior market analyst at Capital.com.
Hathorn said that "U.S. stocks are very expensive", adding the policy path in Europe is enabling "a better environment" for investors.
European rate-sensitive real estate was also amongst the top winning sectors, adding 1.8%.
The technology sub-index also extended gains with a 1.1% climb, as it continued to recover from a selloff earlier in the week triggered by the emergence of DeepSeek's discount artificial intelligence model.
Heavyweight chip equipment maker ASML added 3.4%, while AI-exposed firms such as Siemens Energy Schneider Electric gained 1.4% and 2.1%, respectively.
Meanwhile, industrials jumped 1.2%, boosted by a 4.5% jump in Bucher Industries after the company reported quarterly results.
Spain's IBEX index rose 0.5% to its highest since June 2008 on the back of strong bank earnings from Caixabank and BBVA.
In contrast, shares of Deutsche Bank fell about 6% after Germany's largest lender posted a bigger-than-expected drop in fourth-quarter and 2024 full-year profit.
STMicroelectronics, one of Europe's largest chipmakers, fell 8% to a near five year low after it forecast sales to drop further in the first quarter of 2025.
Sweden's Electrolux fell 7.5% despite beating fourth-quarter earnings expectations, with analysts pointing to guidance for the downside.
On the data front, France's economic activity retreated slightly in the fourth quarter despite firm consumer spending as the boost from the Paris 2024 Olympic Games waned.
Higher energy prices drove up Spain's European Union-harmonised 12-month inflation to 2.9% in January, preliminary data showed.
Germany's gross domestic product fell by a more than expected 0.2% in the fourth quarter, preliminary data from the statistics office showed.
(Reporting by Nikhil Sharma; Editing by Sherry Jacob-Phillips and Varun H K)
