Europe midday: Stoxx slips from record highs as investors mull rate calls

21st Mar 2024 10:37

(Sharecast News) - European stocks fell back from record highs on Thursday as investors cheered dovish comments from US central bankers overnight and digested a surprise cut in Swiss interest rates along with positive business survey data from the eurozone.

The pan-European Stoxx 600 was up 0.94% at 509.96 in early deals, setting a new record for the benchmark regional index. All major bourses were higher.

In the US, the Federal Reserve held rates steady and reiterated expectations for three cuts this year in a more positive outlook despite recent hotter-than-expected inflation data. In Europe, Norway and the Uk held rates, while Turkey's benchmark hit a staggering 50%.

"The status quo has reassured investors that cuts will arrive in the summer, although more patience is needed. Bank of England policymakers are highly unlikely to waver from their stance and are likely to continue to stress that vigilance is still needed while they spy the prospect for rate cuts on the horizon," said Hargreaves Lansdown analyst Susannah Streeter.

"However, there may well be more dissenters around the table, arguing for earlier cuts, given the super-stagnant nature of the economy and the worry that inflation may end up undershooting the target not just briefly but for a more sustained period."

GLIMMER OF HOPE FROM PMI DATA

Meanwhile, business activity across the Eurozone showed early signs of stabilising in March, according to closely-watched research published on Thursday.

The latest HCOB flash Eurozone composite PMI output index came in at 49.9, a nine-month high and an improvement on February's 49.2.

It was also only marginally below the neutral 50.0 level. A reading below 50.0 indicates contraction, while one above it suggests growth.

In equity news, pharma developer Argenx surged 13% after annual results.

Shares in British Airways owner IAG gained on an upgrade from RBC raises to 'outperform' from 'sector perform' and raised the price target to £2.20 from £200.

Reporting by Frank Prenesti for Sharecast.com