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European shares opened on a cautious note on Friday, following strong gains from the previous session, which were driven by the European Central Bank’s (ECB) interest rate cut and upbeat earnings reports. The Europe-wide STOXX 600 index dipped slightly, down 0.05% as of 0718 GMT. Real estate companies led the losses, falling 0.6%, while sectors like basic resources and autos provided support, helping to stabilize the index. Despite the muted start, the main European stocks gauge remains on track for its second consecutive weekly rise.
On Thursday, the ECB trimmed its deposit interest rate to 3.25%, marking the second straight rate cut as policymakers shifted focus toward bolstering the Eurozone’s struggling economy. Although ECB President Christine Lagarde avoided offering clear signals about future rate adjustments, sources close to the matter revealed that a fourth rate cut is expected in December, contingent on economic data trends in the upcoming weeks.
In the corporate sector, Swedish truck maker Volvo saw its shares drop by 3% after reporting a sharper-than-anticipated decline in its third-quarter adjusted operating profit. The company also indicated that it expects demand to remain relatively flat next year, further dampening investor sentiment.
British American Tobacco shares fell by 2% after the company announced it was nearing a settlement in its Canadian tobacco litigation case. This legal development contributed to a cautious outlook for the stock, despite the company’s efforts to resolve the issue.
On a brighter note, Switzerland’s Avolta and Barry Callebaut each enjoyed gains of 2% to 3% following analyst upgrades from Deutsche Bank and Morgan Stanley, respectively. These upgrades boosted investor confidence in the companies, helping them buck the broader market’s flat performance.
Overall, while the ECB’s latest rate cut and positive corporate earnings helped buoy markets earlier in the week, Friday’s session reflected more mixed sentiment, with investors carefully weighing sector-specific news and broader macroeconomic indicators.
