European shares close up after ECB rate cut

Banking stocks mixed after first interest rate reduction in five years

Lululemon Athletica shares rose on Wall Street after the company beat expectations for first-quarter profit and revenue. Photograph: Casey Steffens/The New York Times

European shares rose on Thursday, 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.

“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,” said Janet Mui, head of market analysis at wealth manager RBC Brewin Dolphin.

READ MORE
Dublin

The Iseq All-Share index bucked the general trend across Europe, falling 0.7 per cent to 9.867.97. Ryanair was a weak spot, falling 1.8 per cent to €17.89. The carrier had to cancel scores of flights on Friday due to fresh industrial action by air traffic controllers in France.

Still, fellow travel stock, Irish Continental Group, rose 1.8 per cent to €5.70.

Banking stocks were mixed as sector followers mulled the ECB rate cut. AIB rose 1.4 per cent to €5.12, while Bank of Ireland lost 0.6 per cent to €10.05 and PTSB 2.4 per cent to €1.45.

Smurfit Kappa was also weaker, dipping 1.1 per cent to €44.14.

London

The UK’s FTSE 100 closed up 0.5 per cent as commodity prices ticked higher, while declines in companies trading ex-dividend in London markets capped gains.

In the London market, precious metal miners topped the FTSE 350 sectors with a 3.7 per cent rise, tracking higher prices of gold.

Automobile and parts also closed over 2 per cent higher.

In corporate news, Vodafone Group and National Grid declined 5.8 per cent and 4.2 per cent to the bottom of the FTSE 100 as they traded without entitlement to the latest dividend payouts.

John Wood Group surged 8 per cent after the oilfield services and engineering firm’s board decided to engage with Sidara on a sweetened takeover proposal.

Europe

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.

German enterprise software giant SAP rose 3.6 per cent after chief executive 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 like utilities and real estate were among 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.

New York

Wall Street was struggling to find direction in early afternoon trading as AI-favourite Nvidia slipped after a tech-led rally in the previous session, and investors awaited a key labour market report ahead of the Federal Reserve’s meetings next week to decide on interest rates.

A Thursday report from the Labor Department showed jobless claims rose more than expected to a seasonally adjusted 229,000 for the week ended June 1st, the latest in a string of reports indicating tightness in the labour market is reducing, giving the Fed more room to cut rates.

Gains in Nvidia and other AI-related players have largely driven Wall Street’s rally this year, with the chipmaker accounting for roughly a third of the S&P 500′s over 12 per cent year-to-date gains.

Investors’ focus is now on the crucial nonfarm payrolls report, expected on Friday, which they expect to offer further clues on the strength of the labour market and the path for Federal Reserve policy.

Lululemon Athletica rose after beating expectations for first-quarter profit and revenue on Wednesday. – Additional Reporting by Agencies

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times