Published by Global Banking and Finance Review
Posted on January 30, 2025
By Nikhil Sharma and Johann M Cherian
(Reuters) - Europe's benchmark index closed at a record high on Thursday, led by real estate stocks, as investors priced in more monetary policy easing by the European Central Bank this year and assessed a mixed bag of corporate results.
The ECB lowered borrowing costs by an expected 25 basis points to 2.75% and kept the door open to further policy easing as concerns over lacklustre economic growth superseded worries about persistent inflation.
The decision came on the heels of data showing the euro zone economy unexpectedly stagnated last quarter. Traders now expect about 70 bps worth of rate cuts by year-end.
"A well-telegraphed, widely expected move. A March cut should not be contentious either, but after that, the hawks will need convincing. I am expecting a pause in April," said Arne Petimezas, director of research at AFS Group.
The central bank's move contrasts the U.S. Federal Reserve's verdict to leave rates unchanged on Wednesday.
The pan-European STOXX 600 closed 0.9% higher, logging its 10th advance in the past 12 sessions. Germany's blue-chip index rose 0.4%, also to touch an all-time high.
Rate-sensitive real estate stocks added 1.9% as yields on German bonds declined, with the two-year note at its lowest since Jan. 8.
Leg Immobilien and Tag Immobilien rose 4.6% each, further aided by rating upgrades by brokerage HSBC.
Indexes tracking mid-cap and small-cap companies added 1% and 1.1%, respectively.
Technology stocks rose for the third-straight day, up 1.1% as the sector continued to recover from a sell-off earlier in the week triggered by the emergence of Chinese firm DeepSeek's cheaper AI model.
However, advances were limited by STMicroelectronics' 10.7% drop after one of Europe's largest chipmakers forecast that sales in the first quarter of 2025 would likely drop further.
Also bucking the trend, Deutsche Bank fell about 3.2% after Germany's largest lender posted a bigger-than-expected drop in fourth-quarter and 2024 full-year profit.
Meanwhile, Spain's IBEX index rose 1% to its highest since the 2008 financial crisis on the back of strong bank earnings from Caixabank and BBVA.
Nokia jumped 6.7% after it reported stronger than expected fourth-quarter adjusted operating profit and sales, and was upbeat about 2025 prospects.
In M&A news, ITV jumped 3.6% after a report said the British TV broadcaster has been holding early stage talks with Abu Dhabi-backed group RedBird IMI about a possible merger of their respective production businesses. The broader media sector added 1.9%.
(Reporting by Nikhil Sharma and Johann M Cherian ; Editing by Sherry Jacob-Phillips, Varun H K and Sonia Cheema)
Explore more articles in the Finance category
