European Stocks Close On Strong Note On Optimism About Outlook For Interest Rates

(RTTNews) - European stocks closed higher on Thursday, extending recent gains, amid rising optimism about the outlook for interest rates after the Federal Reserve's monetary policy announcement on Wednesday.

As the Fed left interest rates unchanged for the third time in the past four meetings, there is optimism that the central bank is done raising interest rates. Some slightly weak U.S. economic data have also added to the optimism about rates.

Investors digested the Bank of England's monetary policy announcement, and the latest batch of economic data from the European region, in addition to tracking corporate earnings updates.

As expected, the BoE left its bank rate at a 15-year high of 5.25%, but said the monetary policy is likely to need to be restrictive for an extended period of time.

The pan European Stoxx 600 climbed 1.58%. The U.K.'s FTSE 100 ended 1.42% up, Germany's DAX gained 1.48% and France's CAC 40 surged 1.85%, while Switzerland's SMI advanced 0.84%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Poland, Portugal, Spain, Sweden and Turkiye closed with sharp to moderate gains.

Russia, the only European market to settle in negative territtory today, ended with a modest loss.

In the UK market, British Land Company rallied more than 7%, and Just Eat Takeaway.com gained about 6%. BT Group gained nearly 6% after quarterly earnings beat forecasts.

ICP, Land Securities, Segro, Experian and Smith & Nephew gained 4 to 6%. Royal Dutch Shell gained more than 4% after the oil giant announced a $3.5 billion share buyback after reporting $6.2 billion profit for the third quarter, matching estimates.

Anglo American Plc, Carnival, TUI, Sainsbury, Lloyds Banking, Persimmon, Royal Mail, Johnson Matthey, Ashtead, Legal & General, Ferguson and Croda International also posted strong gains.

Entain drifted down 6.6% after lowering its profit margin forecast for the year. Hima Pharmaceuticals ended nearly 5% down, despite forecasting core operating margin growth for its generics business at the upper end of its earlier guidance for this year.

Centrica and GSK ended lower by about 3% and 2.25%, respectively.

In the German market, Siemens Energy, Fresenius and Porsche gained 5.2 to 6.5%. Vonovia, Volkswagen, Infineon, BASF, Deutsche Telekom, Deutsche Post, Adidas, Mercedes-Benz, Sartorius, Puma, Bayer, BMW and Siemens Healthineers gained 2 to 4%.

Airline Lufthansa surged more than 7% after reporting higher Q3 profit and confirming the outlook for FY23 and FY24.

Zalando ended more than 6% down. HeidelbergCement and Hannover Rueck closed lower by about 2.5% and 1.5%, respectively.

In Paris, Unibail Rodamco climbed more than 7.5%. Teleperformance gained 5.5%, while WorldLine, STMicroElectronics, ArcelorMittal, LVMH, Saint-Gobain, Kering, Eurofins Scientific, Renault and Edenred surged 2.5 to 4.6%.

Schneider Electric gained nearly 4% after the company said that it has finalized the acquisition of EcoAct SAS, a climate consultation and net zero solutions provider.

Alstom gained about 4% after it secured an eight-year services contract extension worth around €950 million from CrossCountry in the United Kingdom.

BNP Paribas, Societe Generale, Michelin, Pernod Ricard, Hermes International, Capgemini and Stellantis also moved up sharply.

BoE's Monetary Policy Committee voted by a majority of 6-3 to maintain the Bank Rate at 5.25%. Three members sought a quarter point hike. The bank had raised the rate by a cumulative 515 basis points over the current tightening cycle that began in December 2021.

The committee said monetary policy is likely to need to be restrictive for an extended period of time. "Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures," the bank said.

The economy is projected to grow only 0.1% in the fourth quarter, weaker than projected previously. The bank forecast inflation to return to the 2% target by the end of 2025. Inflation is projected to fall below the target thereafter, as rising degree of economic slack was expected to reduce domestic inflationary pressures.

In other economic news from the region, Switzerland's consumer confidence deteriorated markedly as their expectations over the economy as well as their personal financial situation sunk, results of a survey showed.

The consumer confidence index plummeted to -40 in the October round of the quarterly survey by the State Secretariat for Economic Affairs, or SECO, from -27 in the previous survey. The score was much less than the long-term average of -6 points.

Consumer price inflation in Switzerland was unchanged in October, preliminary data from the Federal Statistical Office showed. The consumer price index, or CPI, rose 1.7% year-on-year, the same as in September. The rate matched economists' expectations. In August, the Swiss inflation was 1.6%.

Germany's unemployment increased notably in October amid weak economic activity, data released by the Federal Labor Agency revealed. The number of people out of work increased 30,000 after September's rise of 12,000. The actual increase was double the expected rise of 15,000.

Euro area manufacturing activity shrunk substantially in October due to accelerated contractions in new orders and production, the purchasing managers' survey results published by S&P Global revealed on Thursday. The HCOB manufacturing Purchasing Managers' Index, or PMI dropped to a three-month low of 43.1 in October from 43.4 in September. The score was slightly above the flash 43.0.