By Pranav Kashyap and Shashwat Chauhan
(Reuters) – European stocks rose on Thursday, with China-exposed stocks such as luxury and mining stocks outperforming following news of aggressive Chinese economic stimulus, while chip stocks also advanced following a strong earnings forecast from U.S. firm Micron.
The pan-European index closed up 1.3% at 525.61 points, a record closing high and 0.2% below the intraday record high.
Chinese leaders have pledged to implement “necessary fiscal spending” to meet this year's economic growth target of about 5%, acknowledging fresh problems and raising market expectations for fresh stimulus on top of the measures announced this week.
“This is a very positive market reaction that will likely fade a bit over time because the issues around Chinese demand will take time to resolve,” said Tim Graf, managing director and head of macro strategy for EMEA at State Street (NYSE:) Global Markets.
“We are seeing some relief because efforts are being made to resolve them, but it is still a very long process.”
Luxury brands with exposure to China, such as LVMH and Hermes, gained around 9% each. An index of Europe's 10 largest luxury brands rose 6.5%.
Mining stocks also rose 4.3% on higher base metal prices. (MET/L)
Europe's technology sector gained 3% as shares of semiconductor companies rose after Micron technology (NASDAQ:) forecast stronger-than-expected revenue on ai demand.
Bucking the trend, energy heavyweights' stocks fell 3% as prices fell more than 2% following a media report that Saudi Arabia will waive its target price in preparation for increasing output, and as OPEC+ looked set to boost output in December. (O/R)
In Switzerland, the country's central bank cut interest rates by 25 basis points, following steps taken by the European Central Bank (ECB) and the US Federal Reserve to reduce borrowing costs, and leaving the door open for further rate cuts as inflation cools sharply. The Swiss benchmark index closed up 1.4%.
ECB policymakers are preparing to fight for an interest rate cut next month after a string of weaker-than-expected economic data, a move likely to meet resistance from their more conservative peers, seven sources told Reuters.
Deutsche Bank said it now expects a faster rate-cutting cycle from the ECB, with consecutive quarter-point rate cuts starting in December.
Swatch Group (SIX:) rose 12.1% and one trader pointed to a report that the Swiss watchmaker could be delisted.
<img src="https://technicalterrence.com/wp-content/uploads/2024/09/Europe39s-STOXX-600-closes-at-record-high-on-Chinese-stimulus.jpg" title="© Reuters. The chart of the German stock market index DAX is displayed at the Frankfurt Stock Exchange in Frankfurt, Germany, September 25, 2024. REUTERS/Staff” alt=”© Reuters. The chart of the German stock market index DAX is displayed at the Frankfurt Stock Exchange in Frankfurt, Germany, September 25, 2024. REUTERS/Staff” rel=”external-image”/>
Germany's Commerzbank (ETR:) gained 6.9% after the lender confirmed its strategy through 2027 and said it is targeting payout ratios of more than 90% for the years 2025 to 2027.
H&M (ST:) fell 4.6% after the world's second-largest publicly traded fashion retailer scrapped its 2024 margin target.
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