European stocks advance on renewed hopes of June interest rate cut

European stocks gained on Wednesday after softer-than-expected US services sector data, while investors also assessed softening euro zone inflation data that cemented the case for the European Central Bank (ECB) to start cutting interest rates.

Following the data, ECB policymaker Pablo Hernandez de Cos told a financial event in Barcelona that rate cuts could come in June.

While the ECB is expected to leave rates unchanged at its policy meeting next week, investors see a 71 per cent chance of a 25 basis points rate cut in June.

Dublin

The Iseq index closed up 1.7 per cent, outperforming the big European indices as it was buoyed by gains for Kingspan, Ryanair and banking stocks.

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Ryanair rose 2.6 per cent to €21.07 after the airline said it had flown 183.7 million passengers over the 12 months to the end of March, 9 per cent more than the number who travelled with it in the previous financial year.

Kingspan climbed 2.8 per cent, with the insulation maker closing at €85.35, while food group Glanbia also had a good session, rising 1.7 per cent to €18.20. Kerry Group was among the fallers, however, declining 0.6 per cent to €79.60.

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AIB advanced 3.5 per cent to €4.94, while Bank of Ireland rose 1.2 per cent to €9.67, as banks across Europe enjoyed some momentum. Packaging group Smurfit Kappa also finished in the green in the largely positive session, edging up 0.2 per cent to €42.28.

London

The blue-chip FTSE 100 index closed little changed, as a stronger pound overshadowed a boost from heavyweight mining, energy and bank stocks. Precious metal miners firmed 2.1 per cent as gold extended its recent record run, while energy stocks added 1 per cent as oil prices continued to rise on supply risks.

The exporter-heavy FTSE 100 was flat on the day as the pound firmed 0.5 per cent to $1.26, with losses in shares of big dollar earners Unilever, Diageo and AstraZeneca weighing the most.

Shares in Topps Tiles dropped nearly 4 per cent after the retailer flagged subdued demand in the domestic repair and maintenance sector in 2024.

Renishaw fell 2.5 per cent after Germany’s Siemens said it does not intend to make an offer for the engineering company.

Europe

The continent-wide Stoxx 600 closed 0.3 per cent higher, recovering from a two-week intraday low. The index has been hitting record highs, with hopes of rate cuts this year and optimism around artificial intelligence buoying sentiment over the past two quarters.

Banks topped sectoral gainers, rising 1.4 per cent to hit their highest level since early 2018, while euro zone banks also gained 1.5 per cent.

Forvia climbed 5.4 per cent after upbeat analysts’ comments in advance of the European car parts maker’s first-quarter results due on April 18th.

Italy’s FinecoBank gained 6 per cent after analysts at JP Morgan upgraded the online bank and brokerage firm to “overweight” from “neutral”, while German chipmaker Infineon rose 2.4 per cent on a Morgan Stanley upgrade to “overweight.”

Reuters reported Italy is set to lower its GDP growth forecasts this year and next amid a clouded economic outlook. However, Italian stocks rose 0.5%, in line with regional peers.

US

Wall Street’s main indexes advanced in the first hours of trading on Wednesday after softer-than-expected services sector data offered relief to investors worried about the Federal Reserve taking a cautious approach to monetary easing due to resilience in the US economy.

Meanwhile, Fed chairman Jerome Powell reiterated that the US central bank has time to deliberate over its first interest rate cut, widely expected in June, given the strength of the economy and recent high inflation readings.

Most mega-cap growth stocks advanced, with Apple, Amazon and Meta Platforms up between 0.2 per cent and 1.6 per cent.

Intel fell 7.2 per cent after the chipmaker disclosed $7 billion in operating losses for its foundry business in 2023, steeper than the $5.2 billion reported the year before.

— Additional reporting: Reuters

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