Europe open: Stocks rise ahead of central bank meetings

7th Nov 2024 08:03

(Sharecast News) - European stock markets rose on Thursday as investors waded through a barrage of economic data and awaited central bank meetings in Sweden, the UK and US.

Stocks fell sharply on Wednesday in the aftermath of the US presidential election, in which former president Donald Trump beat vice president Kamala Harris with a comfortable majority of the votes.

While Wall Street indices surged overnight - the Nasdaq, S&P 500 and Dow all hit record highs with the latter jumping more than 3% - the market reaction this side of the Atlantic was one of trepidation, as investors mulled over how Trump's proposed import tariffs might affect international trade.

By 0936 CET, the Stoxx 6000 index was up 0.3% at 508.36, with decent gains in Frankfurt, Milan and Madrid partly offset by a flat performance in London and Paris.

Market movers

Danish hearing aids and audio equipment maker GN Store Nord saw shares jump 8% after upgrading its guidance for free cash flow despite softer-than-expected organic revenue growth, with third-quarter earnings beating analysts' forecasts.

Italian bank Banco BPM was also up 8% after saying it is moving to take full control of asset manager Amina Holding - in which it already owns 22% - in a €1.6bn deal.

In London, results from ITV, Auto Trader, BT Group and Rolls-Royce all underwhelmed, with all four stocks among the worst performers on the Stoxx 600.

Central banks, economic data in the spotlight

Sweden's Riksbank on Thursday morning reduced its key policy rate by 50 basis points to 2.75% and said that further monetary easing could happen in December and into the first half of 2025. The central bank said that, to support economic activity, rates might need to be cut faster than anticipated at its latest meeting.

Next up is the Bank of England, which at 1300 CET is also expected to cut rates - this time by 25bp to 4.75%, with two more cuts priced into markets for next year already.

Higher government spending proposed in last week's Autumn Budget has complicated matters for the UK economy somewhat. "And now, the bank analysts are lowering their post-Trump growth expectations for the UK - which is, in return, dovish for the BoE bets," said Swissquote Bank's Ipek Ozkardeskaya.

Finally, at 2000 CET, the Federal Open Market Committee will announced its policy decision, and is widely expected to cut the Federal Funds Rate by 25bp to 4.75%, with all eyes on comments from chair Jerome Powell.

"Perhaps of more importance will be comments about the future direction of travel with markets now expecting only two further cuts in 2025, due to the impact of a fresh Trump presidency with tariff hikes and tax cuts which are expected to be inflationary," said Derren Nathan, head of equity research at Hargreaves Lansdown.

In economic data, German industrial production dropped by 2.5% in September after a revised 2.6% gain in August, according to Destatis. This was much worse than the 1.0% decline expected by the market, and puts production 4.6% lower than last year.

The German trade surplus shrank more than forecast to €17.0bn in September, from €22.5bn the month before, well below the €20.9bn consensus estimate, as exports dropped by 1.7% and imports jump 2.1%.

Eurozone retail sales will be released at 1100 CET and are expected to show a 0.4% increase in September, up from a 0.2% gain August. In the US, jobless claims figures are due out later on, along with non-farm productivity an unit labour costs for the third quarter.