Eurozone business activity picks up on Olympics – PMIECB policymakers shift focus to September meeting UK's JD Sports rises on second-quarter sales growth GN hits STOXX bottom as profit falls short of expectations DB rises on settlement with plaintiffs
(Reuters) – Europe's main stock indexes rose on Thursday, led by healthcare and retail shares, as investors welcomed growing expectations of interest rate cuts from major central banks and scrutinised a flurry of global economic data.
The pan-European STOXX 600 index (.STOXX) closed 0.4 percent higher, its second consecutive day of gains and its highest close this month. The retail sector (.SXRP) led the way, with British sportswear retailer JD Sports (JD.L) rising 11 percent after the company reported improved underlying sales growth in the second quarter. Swiss pharmaceutical company Siegfried Holding AG (SFZN.S) rose 7 percent after better-than-expected first-half results, while bioMérieux AG (BIOX.PA) rose nearly 6 percent after UBS initiated “buy” coverage of the French biotech. The healthcare sector (.SXDP) hit a new record high, helped by a 2.4 percent rise in Novo Nordisk AG (NOVOb.CO), Europe's largest company by market capitalization.
Market participants are broadly pricing in a 25 basis point interest rate cut from the Fed and ECB each in September, which, if implemented, could provide a fresh boost to risk assets globally.
Minutes from the European Central Bank's (ECB) July meeting suggested policymakers feel no urgency to cut interest rates, but growth concerns could lead to new discussions in September. A range of data showed euro zone business activity was surprisingly strong in August, potentially dampening expectations for two more rate cuts by the ECB. Meanwhile, a slowdown in wage growth following negotiations last quarter strengthened the case for a rate cut in September.
“The ECB is likely to cut interest rates in September and December this year, but the overall path is likely to be gradual and subject to considerable uncertainty,” said Chris Hare, senior economist at HSBC.
Investors also hoped that the Federal Reserve, the world's most influential central bank, would begin a rate-cutting cycle next month, and were awaiting comments from policymakers in Jackson Hole this week.
In the United States, weekly jobless claims rose slightly but remained steady near levels consistent with a gradual cooling in the labor market, which should support a cut in U.S. interest rates in September. Among other individual stocks, Deutsche Bank (DBKGn.DE) rose 4 percent after announcing a settlement with plaintiffs in the Postbank takeover lawsuit. Reinsurance company Swiss Re (SRENH.S) rose 4.5 percent after reporting earnings. German ticket sales group CTS Eventim (EVDG.DE) jumped 6 percent after raising its full-year profit outlook. Dutch insurer Aegon (AEGN.AS) fell 5.4 percent after booking a charge of about $400 million in the first half of 2024. Danish hearing aid and audio solutions maker GN Store Nord (GN.CO) fell 9 percent after second-quarter results fell short of expectations.
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Reporting by Pranav Kashyap and Ankika Biswas in Bengaluru; Editing by Savio D'Souza, Janan Venkatraman and Joshi Kao
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