European Shares Surge as Tech Stocks Lead Market Rally

European shares rose on Thursday, largely driven by a surge in technology stocks. The STOXX 600 index was up 0.8%, with technology stocks hitting near 24-year highs. German enterprise SAP and Dutch semiconductor firm ASML were notable contributors. Investors are anticipating a significant interest rate decision from the European Central Bank.


Reuters | Updated: 06-06-2024 14:24 IST | Created: 06-06-2024 14:24 IST
European Shares Surge as Tech Stocks Lead Market Rally
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European shares rose on Thursday, boosted by technology stocks as they hit a near 24-year high, while investors geared up for the European Central Bank's key interest rate decision later in the day.

The pan-European STOXX 600 was up 0.8% as of 0824 GMT, hitting its highest level in three weeks. Technology stocks continued to lead, up 2.1% at its highest since December 2000. German enterprise software giant SAP rose 4.5% lifting the sector after analysts noted CEO Christian Klein's comments at its Sapphire conference, where he provided encouraging guidance for 2026 and 2027.

The stock topped Germany's DAX 40, up 1.1% and outpacing the region's bourses. Dutch semiconductor firm ASML also extended its gains from Wednesday, up 2.3%.

Market participants will now focus on the ECB's interest rate decision, due at 1215 GMT, where the central bank is expected to cut borrowing costs by 25 basis points (bps) from its present record level of 4%. ECB President Christine Lagarde's remarks after the decision will also be key to ascertaining the monetary policy trajectory, as the recent uptick in inflation cast a doubt on future rate cuts.

"We've seen comments from Governing Council members giving essentially the green light to a rate cut, and we've seen inflation, a little bit higher than expected in the reading last week, but overall still trending towards that 2%," said Daniela Hathorn, senior market analyst at Capital.com. "The playing field is primed for a rate cut from Lagarde and her team."

Money markets are pricing in 64 bps of cuts by the ECB this year, as per LSEG data. Helping the upbeat sentiment, the U.S. benchmark index S&P 500 and Nasdaq hit record closing highs on Wednesday after more evidence of easing labour market pressures firmed bets of a Federal Reserve rate cut in September.

Healthcare was another boost, up 1.4% as Novo Nordisk rose 3.8% to hit a fresh record high. Telecommunications and utilities were underperformers, down over 0.3% each.

Among other stocks, Remy Cointreau added 4.3% after the French cognac maker reported a smaller-than-expected drop in it annual profit and predicted a recovery over the coming year. Nemetschek advanced 5.7%, among top performers on the STOXX 600 as the German software developer agreed to buy all shares in U.S. software provider GoCanvas.

The euro zone's retail sales data for April, due at 0900 GMT, is also on investors' radar.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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