European stocks closed higher on Thursday with investors cheering the European Central Banks rate cut announcement, and digesting a slew of corporate earnings updates and regional and U.S. economic data.
The ECB cut key interest rates by 25 basis points, as expected, as policymakers assessed that the disinflation process is on track, although they are increasingly concerned over the health of the euro area economy following some soft data released since the September policy session.
The Governing Council, led by ECB President Christine Lagarde, lowered the deposit facility rate by a quarter basis point to 3.25% following the rate-setting session held in Ljubljana, the capital of Slovenia.
…the decision to lower the deposit facility rate - the rate through which the Governing Council steers the monetary policy stance - is based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, the ECB said.
Lagarde also expressed some concern over the recent economic data as she responded to questions from reporters during the post-decision press conference. The latest decision to lower rates was unanimous, she said.
The ECB chief clearly refused to pre-commit an easing in December, instead stressed on the data-dependency approach. Answering a question, she said the ECB has not yet completely broken the neck of inflation. The bank is still looking at a soft landing, Lagarde said.
The pan European Stoxx 600 climbed 0.83%. The U.K.s FTSE 100 gained 0.67%, Germanys DAX closed higher by 0.77% and Frances CAC 40 ended with a gain of 1.22%, while Switzerlands SMI settled 0.91% up.
Among other markets in Europe, Belgium, Denmark, Finland, Greece, Ireland, Netherlands, Norway, Sweden and Turkiye closed higher.
Austria and Iceland edged up marginally. Poland, Portugal, Russia and Spain ended weak.
In the UK market, Rentokil Initial climbed 8.75%, riding on strong performance in North America in the latest quarter. Melrose Industries, Informa, Anglo American Plc and Barclays Group gained 3.5 to 4%.
Entain, 3i Group, Diageo, ICG, Fresenillo, Natwest Group, Tesco, WPP, Scottish Mortgage, Endeavour Mining, Rolls-Royce Holdings, Pershing Square Holdings, Sage Group and Intertek Group gained 1.5 to 3%.
Mondi tumbled nearly 7.5%. United Utilities Group, Rio Tinto, Persimmon, Smiths Group, Croda International, Vodafone Group, Prudential, Land Securities Group and Smith (DS) lost 1 to 2%.
In the German market, Sartorius zoomed nearly 17%. The pharmaceutical and laboratory equipment supplier confirmed its full-year outlook after reporting sold results for the third quarter.
Merck gained more than 7.5% after reaffirming its annual guidance for earnings per share. Siemens Energy ended 4.2% up. Siemens, HeidelbergCement, Infineon and Commerzbank gained 1.6 to 2%. MTU Aero Engines and Deutsche Boerse also closed notably higher.
E.ON, Vonovia, Daimler Truck Holding, Hanover Rueck, Qiagen, Porsche and Fresenius closed lower by 0.9 to 1.4%.
In the French market, Schneider Electric gained nearly 4% following the companys announcement that it has acquired a controlling stake in Motivair, a provider of liquid cooling solutions for computing systems.
Airbus Group, Publicis Groupe, Safran, Eurofins Scientific, Carrefour and Veolia gained 2 to 4%. Legrand, Pernod Ricard, BNP Paribas, Societe Generale, Viventi, Credit Agricole, STMicroElectronics, Thales, Renault, LVMH and LOreal also posted strong gains.
Final data from Eurostat showed Eurozone inflation eased slightly more than initially estimated in September. The harmonized index of consumer prices posted an annual increase of 1.7%, which was revised down from 1.8% estimated on October 1.
Eurozone trade surplus declined notably in August due to the fall in exports, official data showed. Exports decreased 2.4% on a yearly basis, in contrast to the 9.4% increase in July, Eurostat reported. Likewise, imports dropped 2.3% after prior months 3.6% gain.
As a result, the trade surplus fell to an unadjusted EUR 4.6 billion in August from EUR 4.8 billion in the prior year. In July, the surplus totaled EUR 19.7 billion.