European stock markets rose, buoyed by the European Central Bank's (ECB) rate cut and a recovery in tech stocks. The Stoxx Europe 600 Index climbed 0.8%, marking its biggest gain in three weeks, with most sectors posting gains. Among these, the food and beverage sector led the charge, propelled by a 2.5% rise in Nestlé.
Banking stocks also saw positive momentum, with Nordea Bank leading the way. The ECB's third rate cut of the year was anticipated, as slowing inflation allowed for support of the region's stumbling economy. The key deposit rate was lowered by 25 basis points to 3.25%, aligning with analysts' expectations. The market predicts another rate cut in December.
Christina Carlsten, a senior fund manager at Banque Piguet Galland & Cie SA, noted that inflation is no longer the issue in the Eurozone; rather, it’s the economic weakness, especially in Germany and France. She pointed out that global monetary easing fosters a positive environment for risk assets.
Chip stocks in Europe gained after Taiwan Semiconductor Manufacturing Company's (TSMC) quarterly results surpassed expectations, helping to offset recent disappointments from ASML's performance. ASML shares closed flat, recovering from early gains after two days of sharp declines.
In other stock movements, Nokia's share price fell due to sales falling short of analyst predictions. Meanwhile, Sartorius shares soared as the German laboratory equipment maker's order trends alleviated investor concerns.
ECB President Christine Lagarde reiterated in her post-decision press conference that the economy should recover over time with lower rates and increased consumer spending, although she acknowledged that growth risks remain skewed to the downside.
Bank J. Safra Sarasin's equity strategist, Wolf von Rotberg, highlighted the ongoing macroeconomic uncertainties, citing strong U.S. economic data and the unresolved U.S. election results, suggesting a cautious approach before further action.
