European stocks held gains after Bank of England left rates on hold but kept alive hopes of cuts, following the Swiss central bank’s unexpected decision to reduce interest rates.
The Stoxx 600 Index was 0.5% higher by 12:10 p.m. in London, with the technology, chemicals 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, while the FTSE 100 was 0.4% higher following the rates decision as the country’s central bank hinted that more policymakers may be close to backing interest rate cuts, keeping alive hopes of a loosening by the end of the summer.
Among individual movers, Evotec SE rallied 14% 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 this month’s call of a snap French election unleashed turmoil through markets. The rally in the main regional index has stalled in June 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 UK central bank left its benchmark lending rate on hold at a 16-year high of 5.25% on Thursday. Norges Bank left Norway’s benchmark interest rate unchanged, as economists expected, and said a tight policy stance will be kept for somewhat longer.
In France, the Treasury raised €10.5 billion through auctions of three- to eight-year bonds in its first bond sale since President Emmanuel Macron called the vote. The solid demand for the debt is a sign the political uncertainty is not deterring new buyers.
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, 11:20 PM IST