(Bloomberg) — European stocks rose after the Swiss National Bank cut interest rates on a busy day for monetary policy in the region.
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The Stoxx 600 index rose 0.4% on Thursday, led by gains in the technology, insurance and real estate sectors. U.S. futures contracts also firmed, pointing to fresh record highs when Wall Street reopens after a public holiday. The dollar strengthened against a basket of currencies, while the U.S. 10-year Treasury yield rose three basis points.
The Swiss franc fell 0.5% against the euro and dropped 0.8% against the dollar after policymakers cut borrowing costs for a second time. Inflation pressures eased again compared with the previous quarter, after policymakers said. Switzerland's stock market rose 0.6%.
The rate cut “is a sign that they believe the inflation dynamics can be controlled, and it's a pretty good signal for other central banks as well,” said Guy Miller, chief market strategist at Zurich Insurance Co. Ltd. “It confirms that the likelihood of rate cuts for the rest of this year is very high and that should support risk assets.”
Norges Bank kept rates steady and the Bank of England is expected to do the same when policymakers announce their decision later on Thursday. The BOE is widely expected to begin its easing cycle in August, bolstered by data on Wednesday that showed inflation in the U.K. has slowed to the central bank’s 2% target.
Investors are also closely watching developments in France, which is testing investor appetite for its bonds with an auction of €10.5 billion ($11.3 billion) in government debt. The sale is the first since President Emmanuel Macron surprised markets by announcing a surprise election, pushing France’s yield premium to its highest against Germany since 2017.
France's yield rate rose in line with euro zone peers but remained well above its highest level in recent months.
Meanwhile, Wall Street looks set to set new records. The S&P 500 hit its 31st record high of the year on Tuesday, supported by the ongoing AI frenzy and resilient economic growth that will continue to support corporate earnings, particularly in the technology sector.
Contracts on the Nasdaq 100 rose 0.6% and those on the S&P 500 gained 0.4%, while Nvidia Corp. — now the world's most valuable company — rose 3.7% in New York premarket trading. Tech sector peers including Super Micro Computer and Micron Technology Inc. also gained.
Among stocks that rallied on European stock markets, German drugmaker Evotec SE gained 16%. The company is talking to advisers after a drop in its share price raised concerns about the possibility of a takeover. Societe Bic SA fell 19%, the biggest ever on record, after the French maker of pens and lighters slashed its sales forecast.
Earlier in the day, the offshore yuan fell to its lowest level this year on signs policymakers are loosening their grip on the currency. The People's Bank of China set the yuan's daily reference rate at the lowest since November. China's 10-year government bond futures rose to a record high after the PBOC hinted at interest rate reform and allowed government bonds to trade in the secondary market – a key tool for regulating liquidity.
Major events of this week:
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Eurozone Consumer Confidence, Thursday
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UK BOE Rate Decision, Thursday
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US housing construction starts, initial unemployment claims, Thursday
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Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Friday
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US Existing Home Sales, Conf. Board Leading Index, Friday
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Speech by Fed's Thomas Barkin, Friday
Some of the main activities in the market:
Shares
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The Stoxx Europe 600 gained 0.3% as of 9:33 a.m. London time
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S&P 500 futures rose 0.3%
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Nasdaq 100 futures rose 0.6%
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Futures on the Dow Jones Industrial Average were little changed
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The MSCI Asia Pacific index fell 0.2%
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The MSCI emerging markets index was little changed
Currencies
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The Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.3% to $1.0716
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The Japanese yen fell 0.2% to 158.41 per dollar
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The offshore yuan was little changed at 7.2872 per dollar.
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The British pound fell 0.2% to $1.2698
Cryptocurrency
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Bitcoin rose 1.3% to $65,710.82
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Ether rose 1.3% to $3,597.53
Bonds
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The yield on the 10-year Treasury rose three basis points to 4.25%
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Germany's 10-year yield rose two basis points to 2.43%
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UK 10-year yield rate rose two basis points to 4.09%
Goods
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Brent crude rose 0.3% to $85.33 a barrel
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Spot gold rose 0.2% to $2,333.68 per ounce
This story was generated with assistance from Bloomberg automation.
–With assistance from Chiranjeevi Chakraborty and Winnie Hsu.
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