European Stocks Climb With Swiss Rate Cut Before BOE Decision

European stocks advanced as the Swiss central bank unexpectedly reduced interest rates ahead of a Bank of England policy decision due later and as investors awaited the results of a bond auction in France.

The Stoxx 600 Index was 0.4% higher by 9:07 a.m. in London, with the technology, real estate and construction sectors leading the gains. The main equities benchmark in Zurich rose as much as 0.6% after Swiss National Bank’s second rate cut this year. 

Among individual movers, Evotec SE rallied 16% following a report that the German drug developer is speaking to defense advisers after a decline in its share price prompted fears about the company’s vulnerability to a takeover. Societe BIC SA slumped as much as 19%, the most on record, after the French maker of pens and lighters downgraded its sales guidance.

Sentiment remains fragile after the calling of a snap French election on June 9 unleashed turmoil through markets. The rally in the main regional index has stalled this month and it is now about 7.6% higher since the start of the year. In the face of recent events, investors are switching exposure more toward laggard stocks and defensive plays.

The BOE will announce its decision at 12 p.m. with investors and analysts expecting the central bank to leave the benchmark rate unchanged at a 16-year high of 5.25%. Norges Bank kept Norway’s benchmark interest rate unchanged, as eonomists expected, and said a tight policy stance will be kept for somewhat longer. 

In France, the Treasury aims to raise up to €10.5 billion through auctions of three- to eight-year bonds in the first sale since President Emmanuel Macron called a snap vote. 

Market activity may be quieter than usual as traders ready for a quarterly event on Friday where index futures, equity index options and stocks options all expire in a process known as triple witching.

“Low volumes accompany the days before Friday’s expiry,” said Guillermo Hernandez Sampere, head of trading at asset manager MPPM. “The markets can calm down somewhat from the recent uncertainties, but global and monetary policy issues will determine the period ahead.” 


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With assistance from Michael Msika.

This article was generated from an automated news agency feed without modifications to text.

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Published: 20 Jun 2024, 11:21 PM IST

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