FX.co ★ European Stocks Close Higher Again On Earnings, Rate Cut Hopes

European stocks closed on a high note on Wednesday, continuing a recent trend of positive performances. The optimism stems from anticipated interest rate cuts by central banks in the second or third quarter of the year. Furthermore, favorable corporate earnings updates contributed to this upbeat sentiment.

The comprehensive European Stoxx 600 index gained 0.34%, the UK's FTSE 100 increased by 0.49%, Germany's DAX rose by 0.37%, France's CAC 40 advanced 0.69%, while Switzerland's SMI surged 0.78%. Also, other European markets including Belgium, Denmark, Greece, Ireland, Norway, Poland, Portugal, Russia, and Spain recorded higher returns, with Finland seeing a marginal increase.

However, Austria, Iceland, Sweden, and Turkey had a weak close, while the Netherlands remained flat.

In the UK, IAG saw a significant increase of about 3.75%. Beazley, EasyJet, RS Group, Rolls-Royce Holdings, Melrose Industries, IMI, Prudential, and Centrica observed gains ranging between 2 to 3.1%. The shares of Informa, a publishing and exhibitions company, rose over 2% following the announcement of a 50% increase in their share buyback program due to a strong start to 2024.

Shares of pharmaceutical company AstraZeneca increased by 1.2% after it announced plans to withdraw its Vaxzevria COVID-19 vaccine worldwide, due to low demand and surplus availability of new vaccines. Ocado Group saw a decline of nearly 4% while Phoenix Group Holdings, JD Sports Fashion, ICG, Glencore, and Rio Tinto experienced losses between 1 to 2%.

In Germany, Siemens Energy raised its 2024 guidance after posting strong quarterly results, leading to a 12.5% surge in stocks. Puma's stocks increased by nearly 11% after the company's first-quarter sales met expectations. However, Zalando observed a decline of about 5%.

In France, Alstom, a manufacturer of rail transport sector infrastructures, observed a more than 5% increase. The company plans a capital increase of about €1 billion ($1.1 billion) as a measure to improve its financial condition. Conversely, stocks for Veolia, ArcelorMittal, and Stellantis ended on a low.

In economic news, Germany's industrial production dropped in March due to weakened consumer and intermediate goods output. German industrial production declined 0.4% on a monthly basis, less severe than the expected 0.6% fall.

Meanwhile, Sweden's central bank reduced its policy rate for the first time in eight years and signaled further cuts to combat weak economic activity and achieve its 2% inflation target. The Riksbank's executive board, led by Governor Erik Thedeen, decided to lower the policy rate by 25 basis points to 3.75%.