European stocks experienced a rise on Thursday, with investors actively attracted by upbeat corporate earnings and the predicted interest rate cuts by the Federal Reserve and the Bank of England in the second quarter.
The pan-European Stoxx 600 index experienced a 0.68% increase. The U.K.'s FTSE 100 closed with a 0.38% gain, while Germany's DAX and France's CAC 40 witnessed a surge of 0.6% and 0.86% respectively. The Swiss SMI Index also saw a 0.63% boost.
Markets in Austria, Belgium, Denmark, Finland, Iceland, Netherlands, Norway, Portugal, Russia, Spain, Sweden and Turkey also ended higher, while Greece faced a weak ending. Poland remained steady.
In the UK, stocks like Croda International, Kingfisher, Natwest Group, Fresnillo, Coca-Cola, Pearson, Centrica, Prudential, and others experienced a 2 to 3% gain. However, Imperial Brands saw a 3% drop, BP dipped by 1.7%, and Royal Dutch Shell and Marks & Spencer also ended lower.
Commerzbank gained attention in the German market by rallying over 5%. Following their report of a 55% net profit surge for FY 2023, the bank initiated plans to return approximately 1 billion euros capital to shareholders. Siemens Energy ended 1.8% lower along with Fresenius Medical Care, Porsche, Adidas and SAP.
In French markets, Renault rose by more than 6.5% followed by a profit report in 2023. Stellantis jumped 5.3% on news of share buyback. Safran reported higher revenue and operating profit for 2023, resulting in a 4.2% gain. Despite reducing its sales guidance for FY 2024, Pernod Ricard predicted improved future demand in significant markets like China and U.S., pushing its gain by more than 2.5%.
While some businesses like Schneider Electric experienced a gain after lifting dividends and predicting increased revenue and earnings, some businesses like Essilor, Michelin, TotalEnergies and Airbus Group ended down by 1 to 1.5%.
Data from the Office for National Statistics revealed a 0.3% sequential dip in the U.K. gross domestic product. However, with U.K. inflation holding steady in January, traders have forecast 70 bps of cuts from the Bank of England this year.
The euro area economy is expected to recover modestly, but inflation may significantly slow down due to falling energy prices, as per the European Commission's Winter interim forecast. Growth projections for 2025 have been trimmed down to 1.5%. The inflation projection for 2024 has been lowered to 2.7%, but next year's forecast remains the same at 2.2%.
Germany's real GDP is anticipated to expand by 0.3% in 2024, which is less than the earlier forecast of 0.8%. France's GDP is expected to grow by a moderate 0.9% annually in 2024, a downward revision of 0.3 percentage points. The GDP growth for 2025 is estimated at 1.3%.
