European Shares Rise Ahead of ECB Rate Decision
On Thursday, European shares experienced a notable rise, particularly driven by technology stocks, which reached their highest level in nearly 24 years. This upward momentum comes as investors anticipate the European Central Bank’s (ECB) key interest rate decision later in the day. By 0824 GMT, the pan-European STOXX 600 had climbed 0.8%, marking its highest point in three weeks.
Technology stocks were at the forefront of this surge, with an increase of 2.1%, reaching heights not seen since December 2000. A significant contributor to this trend was the German enterprise software giant SAP, which saw a 4.5% rise. This boost followed analysts’ positive reception to CEO Christian Klein’s comments at the Sapphire conference, where he shared promising guidance for 2026 and 2027. Consequently, SAP topped Germany’s DAX 40, which itself was up by 1.1%, outpacing other regional markets.
Dutch semiconductor firm ASML also continued its upward trajectory from the previous day, rising by 2.3%. As market participants awaited the ECB’s interest rate decision, scheduled for 1215 GMT, expectations were high for a 25 basis point cut from the current record level of 4%. The focus was also on ECB President Christine Lagarde’s subsequent remarks, which are expected to provide insights into future monetary policy, especially in light of recent inflation increases that have raised questions about further rate cuts.
Daniela Hathorn, senior market analyst at Capital.com, highlighted the general optimism for a rate cut, citing comments from ECB Governing Council members and the recent inflation readings that still trend towards the 2% target. She stated, “The playing field is primed for a rate cut from Lagarde and her team.”
Market data from LSEG indicates that money markets are pricing in 64 basis points of cuts by the ECB this year. This positive sentiment was further bolstered by the U.S. benchmark indices S&P 500 and Nasdaq, which hit record closing highs on Wednesday. The U.S. markets were encouraged by signs of easing labour market pressures, which strengthened expectations for a Federal Reserve rate cut in September.
Additionally, the healthcare sector saw a rise of 1.4%, with Novo Nordisk achieving a 3.8% increase, setting a new record high. Other notable performers included Remy Cointreau, which rose by 4.3% after reporting a smaller-than-expected drop in annual profit and predicting a recovery in the coming year. Nemetschek advanced by 5.7%, becoming one of the top performers on the STOXX 600, as the German software developer agreed to acquire all shares in the U.S. software provider GoCanvas.
Investors also kept an eye on the euro zone’s retail sales data for April, which was due at 0900 GMT. This data was another crucial indicator for the market, adding to the anticipation surrounding the ECB’s upcoming decisions.
JPMorgan European Discovery Trust plc (LON:JEDT) is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
