European Stocks: European stocks hit records after the ECB cut interest rates for the first time in five years.
The pan-European STOXX 600 index rose 0.7%, hitting a record high in early trading.
The ECB cut interest rates for the first time since 2019, citing progress in tackling inflation while acknowledging the fight is far from over.
“Perhaps the ECB was pushed into a corner by today’s rate cut, which has somewhat eroded confidence around ‘data dependency,’” said Janet Mui, head of market analysis at RBC Brewin Dolphin. said.
“Overall, further rate cuts are likely in this cycle as disinflation has made significant progress and is expected to continue, but it is difficult to confirm the path for rate cuts as economic growth is on an improving basis again.” In its forecast, the ECB said inflation is expected to average 2.2% in 2025. This is up from the previous estimate of 2.0% and means it now remains well above the central bank’s target of 2% for next year. Only one, ECB President Christine Lagarde, spoke. ECB board members opposed the bank’s decision to cut interest rates this morning. European lenders led sector gains, up 1.7%, while the healthcare sector also rose 1.4%, with Novo Nordisk rising nearly 4% to a record high.
Technology stocks rose 1.2% to close near their highest level since December 2000, while German enterprise software giant SAP rose 3.6% after CEO Christian Klein gave encouraging guidance for 2026 and 2027. The stock rose 0.4%, rising above Germany’s DAX 40.
Dutch semiconductor company ASML also extended its gains, rising 1.5% since Wednesday.
Industries sensitive to interest rates, such as utilities and real estate, performed poorly, falling 0.9% and 0.6%, respectively.
Among other stocks, Nemetschek rose 6.2% after the German software developer agreed to acquire U.S. software provider GoCanvas.
On the data front, euro zone retail sales fell more than expected in April, down 0.5% compared to an expected 0.3% decline.
