European Stocks Bounce Back as Investor Focus Turns to Fed, BOE
(Bloomberg) -- European stocks rebounded on Thursday as traders turned their focus to monetary policy ahead of the Federal Reserve’s widely expected interest-rate cut.
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The Stoxx Europe 600 Index was up 0.6% by the close. An inflation warning by the Bank of England weighed on London’s FTSE 100. In European markets, automakers climbed and miners also outperformed. Health care, personal care and telecom shares lagged.
Among single stocks, RWE AG shares rose after Bloomberg reported that activist investor Elliott Investment Management has built up a sizable stake in the German utility and is urging it to consider a share buyback. Italy’s third-largest bank, Banco BPM SpA, also gained after launching a takeover offer for Anima Holding SpA.
Among decliners, Adyen NV fell after the payment firm’s volume growth unexpectedly decelerated in the third quarter.
The UK’s FTSE 100 underperformed after the BOE cut borrowing costs for the second time this year. The central bank stopped short of signaling faster easing, warning that the budget could drive up inflation by as much as half a percentage point.
In Germany, the blue-chip DAX Index jumped 1.7% after Chancellor Olaf Scholz called for a snap election after divisions over how to revive the lackluster economy triggered the breakup of his fractious three-party ruling coalition. Separately, data showed Germany’s industrial production falling more than economists expected in September.
READ: German Stocks Lifted by Demise of Scholz’s Fractious Coalition
“The fact Scholz is calling for elections is a first step going in the right direction for Europe — the area needs a leadership interested in growing the German economy,” said Arnaud Girod, head of economics and cross-asset strategy at Kepler Cheuvreux in Paris.
“I think this is positive for European markets, which I don’t see continuing to fall while US stocks march on higher,” he added.
So far this year, European stocks have widely underperformed their US peers, with the Stoxx 600 gaining less than 7% compared with about 25% for the S&P 500. The US benchmark extended gains Thursday on prospects that a second Trump administration will enact pro-growth policies that will boost corporate America.
“I expect European markets to start making some comeback as soon as in the coming sessions,” Girod added.
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--With assistance from Michael Msika.
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