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European shares rose 1% on Thursday, buoyed by a strong performance in technology stocks, as investors awaited the European Central Bank’s (ECB) highly anticipated policy decision later in the day. A 25-basis-point rate cut is widely expected, with markets looking for further guidance on potential additional cuts later this year.
The pan-European STOXX 600 index climbed 1% to 513.1 points, putting it on track for its best day in over a month, should the gains hold. All regional indexes were up by more than 1%, supported by a broad rally in global markets.
Technology Stocks Lead the Charge
Technology stocks surged 2.5%, driving the largest gains in the STOXX 600, after a strong rally in their Asian counterparts. A report from Semafor indicating that the U.S. government may allow Nvidia (NASDAQ:NVDA) to export advanced chips to Saudi Arabia further fueled the sector’s rise, with Nvidia’s shares jumping 8% on the news.
Basic resource stocks also posted significant gains, up 2.3%, as base metal prices rose on hopes of a U.S. interest rate cut next week.
ECB Rate Cut Anticipation
Investors are now focused on the ECB’s policy announcement, with the central bank expected to lower rates by 25 basis points at its meeting, scheduled for 1215 GMT. ECB President Christine Lagarde’s comments at 1245 GMT will be closely monitored for any hints regarding the likelihood of further rate reductions in October and December.
Despite easing inflation across some European nations, expectations for more rate cuts remain strong. Spain’s EU-harmonized inflation for August slowed to 2.4%, pushing the IBEX 35 index up over 1%. Meanwhile, Swedish inflation eased by 0.5% in August, slightly below forecasts.
Roche Shares Slide on Drug Trial Results
In a rare exception to the broader rally, shares of Swiss pharmaceutical giant Roche fell 4% after the company announced that promising results from an early-stage trial of its experimental weight-loss pill were based on data from only six patients, disappointing investors.
U.S. Inflation Data Shapes Fed Expectations
Overnight U.S. core consumer price index (CPI) data showed a 0.28% increase in August, slightly above the forecasted 0.2% rise. While the increase was modest, it has solidified market expectations that the Federal Reserve will opt for a 25-basis-point rate cut at its meeting next week, easing concerns of a more aggressive reduction.
As global markets await the ECB’s decision, European stocks are poised for further gains, supported by optimism in the tech sector and easing inflation in several key regions.
