European stock markets ended on a positive note on Thursday, influenced by a series of earnings reports, economic indicators, and the European Central Bank's decision to reduce interest rates by 25 basis points.
Investors also absorbed the Federal Reserve's choice to maintain current rates, alongside its statements concerning inflation and potential future interest rate adjustments.
As anticipated, the ECB cut interest rates for the fourth consecutive policy session to tackle the slowed eurozone economy in the final quarter of 2024 and rising inflationary pressures. The Governing Council, under the leadership of ECB President Christine Lagarde, reduced the deposit rate by 25 basis points to 2.75%. This marks the ECB's consistent approach of reducing rates by 25 basis points since September.
The pan-European Stoxx 600 index rose by 0.86%, while the UK's FTSE 100 increased by 1.04%. Germany's DAX, France's CAC 40, and Switzerland's SMI indices also registered gains of 0.41%, 0.88%, and 0.59%, respectively.
Other European markets, including Austria, Belgium, Finland, Greece, Ireland, Netherlands, Norway, Poland, Russia, Spain, and Sweden, also ended on a positive trajectory. Iceland saw a slight uptick, whereas Denmark, Portugal, and Turkey remained unchanged.
In the UK, shares of St. James's Place surged over 11%, buoyed by the announcement of a record £190.2bn in assets under management, despite a decline in net inflows over the past year. Airtel Africa saw a 9% increase following a substantial rise in its nine-month pre-tax profit, reaching $494 million, a massive leap from last year's $55 million. The company's nine-month net profit stood at $164 million, a sharp contrast to a $61 million loss in the same period last year, translating to earnings per share of 4.4 cents compared to a loss of 1.6 cents previously.
Meanwhile, Endeavour Mining advanced 7.2%, Fresnillo by 5.6%, and EasyJet by 4.3%. Companies like Antofagasta, Marks & Spencer, Pearson, Prudential, ICG, Shell, United Utilities, WPP, Glencore, RightMove, Informa, Spirax Group, and Rolls-Royce Holdings experienced gains ranging from 2% to 3.1%.
However, BT Group faced a significant decline following reports of decreased third-quarter revenues. Despite a 1% rise in third-quarter profit before tax to £427 million attributed to EBITDA growth, revenue for the third quarter was down by 3%, reaching £5.2 billion.
Whitbread's shares dipped by 2.3%, while Admiral Group and DS Smith also experienced considerable losses.
In Germany, Siemens Energy's shares rose more than 4.5%, with Vonovia and Brenntag seeing gains of about 3.5% and 3%, respectively. Other noteworthy performers, including Beiersdorf, Sartorius, Merck, and several others, posted increases between 1% and 2.2%. Conversely, Infineon fell by 3.4%, and both Deutsche Bank and Deutsche Post also saw declines.
In France, Eurofins Scientific surged by approximately 5%, Kering gained 4.1%, and other major companies like L'Oreal, ArcelorMittal, and Vivendi recorded gains between 2% and 2.5%. Nevertheless, STMicroElectronics struggled significantly, with a drop exceeding 10% due to disappointing quarterly results.
From an economic standpoint, the German economy unexpectedly contracted in the fourth quarter, primarily due to weaker exports, raising recession concerns. Preliminary data from Destatis showed a 0.2% drop in GDP, contrary to anticipated growth. Import prices in Germany rose by 2% yearly, marking the fastest increase in nearly two years.
Similarly, the French economy witnessed its first contraction in almost two years during the fourth quarter. The statistical office INSEE reported a 0.1% sequential decline in GDP following a 0.4% expansion in the third quarter.The recent data reveals that the GDP experienced its first quarterly decline since the first quarter of 2023, where it similarly decreased by 0.1%. The comprehensive details for the fourth quarter are scheduled to be released on February 28.
In the entire year of 2024, the GDP saw a growth of 1.1%, maintaining the same growth rate observed in 2023, with a more robust growth of 2.6% recorded in 2022.
According to data from the statistical office INSEE, household spending increased significantly by 0.7% in December, following a 0.2% rise in November. This surpassed the anticipated growth of 0.1%.
Meanwhile, a report from the Bank of England highlighted that net consumer credit borrowing by individuals in the UK reached £1.045 billion in December 2024, a slight increase from £0.9 billion in November and exceeding the forecasted £0.95 billion.
Additionally, separate data from the Bank of England indicated that net mortgage approvals for house purchases in the UK, a key indicator of future borrowing activity, rose to 66.53 thousand in December 2024. This represented an increase from a revised 66.06 thousand the previous month and surpassed the expected 65.4 thousand.
