Europe: Shares close up after ECB delivers first rate cut in five years
EUROPEAN shares closed higher on Thursday (Jun 6), boosted by banking, technology and healthcare stocks, though they finished below session highs after the European Central Bank (ECB) cut lending rates for the first time since 2019 but left the timing of future moves unclear.
The pan-European Stoxx 600 closed 0.7 per cent higher, off record high levels hit earlier in the session.
The ECB went ahead with its first interest rate cut since 2019, citing progress in tackling inflation even as it acknowledged the fight was far from over.
“Arguably the ECB has been cornered to a rate cut today which reduced somewhat its credibility in relation to ‘data dependency’,” said Janet Mui, head of market analysis at wealth manager RBC Brewin Dolphin.
“Overall, there are likely to be further rate cuts in this cycle as disinflation has made huge progress and is set to continue, but the path of the rate cuts is difficult to pinpoint, as economic growth is on a better footing again”
In new forecasts, the ECB said it expected inflation to average 2.2 per cent in 2025 – up from a previous estimate of 2 per cent and meaning it was now seen holding above the central bank’s 2 per cent target well into next year.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
ECB president Christine Lagarde said that only one ECB Governing Council member had opposed the bank’s decision to cut interest rates earlier in the day.
European lenders led sectoral gains, rising 1.7 per cent, while healthcare was another boost, advancing 1.4 per cent as Novo Nordisk rose almost 4 per cent to hit a record high.
Technology stocks closed 1.2 per cent higher, holding near its highest since December 2000, with German enterprise software giant SAP rising 3.6 per cent after CEO Christian Klein gave encouraging guidance for 2026 and 2027. The stock topped Germany’s DAX 40, which closed 0.4 per cent up.
Dutch semiconductor firm ASML also extended its gains from Wednesday, rising 1.5 per cent.
Rate-sensitive sectors such as utility and real estate were amongst the laggards, falling 0.9 per cent and 0.6 per cent, respectively.
Among other stocks, Nemetschek advanced 6.2 per cent as the German software developer agreed to buy US software provider GoCanvas.
On the data front, eurozone retail sales fell more than anticipated in April, declining 0.5 per cent against expectations of a 0.3 per cent decline. REUTERS
Share with us your feedback on BT's products and services
