Strongest day in 6 months for European stocks on ECB’ signals

On Thursday, when the European Central Bank hinted that its monetary tightening was coming to an end, European stocks had their largest percentage gain in six months. The Eurozone equities index increased 1.3%, while the pan-European STOXX 600 index increased 1.5% to reach a more than one-week high.

European stocks climbed Thursday, as the Stoxx Europe 600 index STOXX Europe 600 Index finished up 1.52% to 460.86. The FTSE 100 index FTSE 100 Index rose 1.95% to 7,673.08, the French CAC 40 index CAC 40 Index gained 1.19% to 7,308.67 and the German DAX DAX gained 0.97% to 15,805.29.

After the ECB increased its benchmark interest rate to a record high of 4%, European government bond yields shrank, although this was probably the last action the ECB would take given the weak state of the euro zone’s economy. Rate-sensitive real estate saw a 3.0% increase, while investors saw a 4.2% increase as a result of higher metal prices. Business surveys point to an impending severe slowdown in growth, suggesting that the ECB is likely done raising interest rates.

A halt might turn into a peak if the GDP picture worsens further. Following the ECB’s action earlier in the day, the central bank of Denmark similarly increased its benchmark interest rate by 25 basis points. While Oslo stocks increased 1.8% to reach record highs, the resource-heavy FTSE 100 of the UK outperformed regional peers with a 2.0% gain.

As crude prices surpassed 2023 highs, the energy index increased by 2.4%. German automakers were under pressure, as the cars index dropped 0.4%. Beijing criticized the European Commission’s decision to open an investigation into China’s electric vehicle (EV) subsidies and warned that it would harm economic ties, a worry shared by Germany’s auto industry.

The European Union’s scrutiny of Chinese electric-vehicles has grown into a full-blown spat, introducing a fresh catalyst for the EV space and boding ill for EU-China relations more broadly.

Neste climbed 4.1% 4.1% as a result of Goldman Sachs upgrading the stock to a “buy” rating on the Finnish oil refiner and biofuel producer.

After the British e-commerce company said its annual sales from continuing operations would be flat or down as much as 5%, THG (THG.L) fell 21.3%. Pernod Ricard (PERP.PA) and Remy Cointreau (RCOP.PA), two French distilled spirits companies, saw declines of 0.3% and 1.4%, respectively, after Barclays downgraded the stocks to underweight from overweight.