Europe close: Stocks snap three-day losing streak after late rally

19th Mar 2024 16:05

(Sharecast News) - A positive start on Wall Street sparked a late-afternoon rally in Europe on Tuesday, helping the Stoxx 600 index to rebound after three straight days of losses.

After registering losses early on, the Stoxx 600 finished the session up 0.3% at 505.27, with gains of 1% in Milan and Madrid tempered by a more subdued performance in London and Frankfurt.

Even after recent losses - the Stoxx 600 has been falling since hitting a new record closing high of 507.33 on 13 March - the pan-European benchmark index has risen 5.6% since the start of 2024.

"Most equity indices [...] were trading in slightly positive territory ahead of Wednesday's Fed meeting which is hoped to provide more clarity with regards to the dot plot," said Axel Rudolph, senior market analyst at IG.

Dominating headlines early on was the Bank of Japan, which raised interest rates earlier than expected, ending an eight-year policy of keeping them in negative territory, in an attempt to boost economic growth. The rise was the first in 17 years as the BoJ said it was lifting its short-term policy rate from -0.1% to between zero and 0.1%. In 2016, the bank cut the rate below zero in an attempt to stimulate the country's stagnating economy.

Meanwhile, Russ Mould, investment director at AJ Bell, said investors are likely to be sitting on their hands until the Fed unveils its latest interest rate decision tomorrow. "A rate cut looks unlikely at this meeting so the big focus will be on economic projections and how many rate cuts we might see later in the year," he said.

Helping sentiment in Europe was a business sentiment survey in Germany, which showed that economic optimism reached a two-year high. The ZEW Center for European Economic Research reported that its headline investor expectations index rose to 31.7, up 11.8 points from February, while the indicator for the current economic situation ticked up just 1.2 points to -80.5.

Market movers

British-Dutch consumer goods giant Unilever rallied more than 3% as it announced plans to spin off its ice cream division by the end of 2025, and cut 7,500 jobs across its global operations. The company also said its productivity programme was expected to deliver total cost savings of around €800m over the next three years, causing shares in London and Amsterdam to jump.

Close Brothers surged as it outlined measures that to strengthen its available CET1 capital by around £400m by the end of the 2025 to deal with any potential fallout from the Financial Conduct Authority's review into mis-sold car loans.

German industrial engineering group Thyssenkrupp finished higher on speculation that it may sell part of its marine systems business to Carlyle - though that is thought to be one of the many options on the table.

AstraZeneca edged lower on the back of plans to buy US-listed biopharmaceutical company Fusion Pharmaceuticals for up to $2bn.