European markets concluded Thursday's session on a mixed note, as investors assessed the European Central Bank's (ECB) recent move to trim interest rates by 25 basis points, along with the likelihood of a subsequent reduction in early 2025.
The Swiss National Bank surprised with a more significant cut of 50 basis points to its benchmark rate, aimed at tempering the Swiss franc's strength. This decision marked the inaugural policy meeting under Chairman Martin Schlegel, with the rate dropping to 0.5% from 1%, effective December 13.
Market participants are also bracing for the Federal Reserve's policy statement next week, while awaiting French President Emmanuel Macron's new prime ministerial appointment.
The pan-European Stoxx 600 index dipped by 0.14%. France's CAC 40 edged lower by 0.03%, whereas the U.K.'s FTSE 100 and Germany's DAX posted gains of 0.12% and 0.13%, respectively. Switzerland's SMI advanced by 0.29%.
In other European markets, Austria, Belgium, Greece, Iceland, Ireland, and Portugal recorded gains. Conversely, markets in Denmark, Finland, the Netherlands, Poland, Russia, Spain, and Sweden saw declines. Norway and Turkiye ended the session unchanged.
The ECB's decision to cut its key interest rate by another 25 basis points met economists' expectations. Policymakers noted that while disinflation is progressing, growth concerns persist. The Governing Council, presided over by ECB President Christine Lagarde, reduced the deposit rate to 3%. The refinancing rate was adjusted to 3.15%, and the marginal lending facility rate was set at 3.4%.
The ECB emphasized a data-driven and meeting-by-meeting approach for future monetary policy decisions, focusing on the inflation outlook and underlying economic and financial data dynamics, without committing to a specific rate trajectory.
The ECB's latest economic projections estimate Eurozone headline inflation at 2.4% for this year, tapering to 2.1% in 2024, 1.9% in 2026, and 2.1% in 2027. Core inflation is expected at 2.9% this year, falling to 2.3% next year, and stabilizing at 1.9% for 2026 and 2027. Economic growth forecasts for the region suggest expansion by 0.7% this year, 1.1% in 2024, 1.4% in 2026, and 1.3% in 2027.
In the UK, Diageo surged by 2.77% following a ratings upgrade by UBS. Other notable gainers, including Severn Trent, Scottish Mortgage, Barclays, Pershing Square Holdings, Lloyds Banking Group, BAE Systems, IAG, Sage Group, Sainsbury, Centrica, United Utilities, Smith & Nephew, Marks & Spencer Group, and Schroders, climbed between 1% and 2%.
Rentokil Initial tumbled nearly 4%, with Antofagasta decreasing by 3.4%. Associated British Foods, ICG, Fresnillo, Endeavour Mining, Berkeley Group Holdings, Vistry Group, and Diploma declined by 2% to 3%. Persimmon, Rio Tinto, Melrose Industries, Bunzl, Glencore, and Halma experienced significant downturns as well.
On the German front, BMW advanced approximately 2.3%, supported by gains in Puma, SAP, Mercedes-Benz, Rheinmetall, Beiersdorf, Volkswagen, Adidas, MTU Aero Engines, Bayer, and BASF, which rose by 0.6% to 1.6%. Siemens Energy concluded almost 4% lower, while Deutsche Post and Munich RE both lost around 1.8%. Weakness was also seen in Henkel, Brenntag, Merck, HeidelbergCement, Siemens, Allianz, RWE, and Siemens Healthineers.
In France, prominent stocks like Airbus Group, Societe Generale, Pernod Ricard, Hermes International, Kering, Accor, and Eurofins Scientific saw their shares rise by 1% to 2.2%. However, Edenred dropped over 3%, with Teleperformance, ArcelorMittal, Legrand, Capgemini, BNP Paribas, Schneider Electric, Sanofi, and Safran closing with losses between 0.8% and 1.6%.
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