ECB Eases Rates as European Shares Slip, Focus Turns to U.S. Jobs Data

European shares edged lower after the ECB's 25-basis-point rate cut, shifting focus to U.S. jobs data for cues on Fed's interest rate path. Technology stocks gained, cushioning the benchmark index. Meanwhile, real estate faced losses, and Sweden's OMXS30 outperformed regional indices.

Reuters | Updated: 07-06-2024 14:45 IST | Created: 07-06-2024 14:45 IST
ECB Eases Rates as European Shares Slip, Focus Turns to U.S. Jobs Data
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European shares edged lower on Friday, a day after the European Central Bank eased borrowing costs as was widely expected, with the focus now shifting to the U.S. jobs data to gauge the Federal Reserve's interest rate path. The continent-wide STOXX 600 was down 0.1%, as of 0818 GMT, but was poised to clock its first weekly gain in three.

The ECB delivered a 25-basis-point rate cut on Thursday, its first since 2019, joining its counterparts in Canada, Sweden and Switzerland in easing the monetary policy. The central bank, however, provided little clues about the future interest rate path, causing traders to scale back bets of additional rate cuts.

Finnish ECB policymaker Olli Rehn said in a blog post that inflation will continue to decline and interest rate cuts will support economic recovery, while Bundesbank President Joachim Nagel said the ECB was not on autopilot mode and still acting restrictively despite the cut. "Despite the bumpy ride in inflation expectations over the coming months, our view remains that the disinflation trend is intact in Europe," Mohit Kumar, chief economist Europe at Jefferies, wrote in a note.

"We also feel that the next cut will be influenced by the Fed and the macro picture in the U.S." Market attention is now on the key U.S. nonfarm payrolls data due later in the day, which could show signs of easing labour market pressures and firm bets of September cut from the Fed.

Technology stocks gained for the third straight session and cushioned the benchmark index, up 0.5%. Real estate led sectoral losses, dragged by a 3.4% fall in German real estate group Vonovia on a Morgan Stanley rating downgrade.

Sweden's blue-chip OMXS30 index outpaced the region's bourses, up nearly 0.4%, while France's CAC 40 and Germany's DAX 40 were laggards, down 0.4% each. Temenos added 2% after the Swiss banking software firm announced a new share buyback programme of up to 200 million Swiss francs ($224.92 million).

doValue advanced 5.5% as Italy's biggest bad loan company was set to acquire rival Gardant in a deal that includes 230 million euros ($250.59 million) in cash and the rest in stock. Investors will also watch the euro zone's revised gross domestic product (GDP) numbers for the first-quarter later in the day.

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

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