Europe open: Shares up on US rate cut boost, eyes on ECB
European shares made a solid start to trade on Wednesday as a softer US jobs market report increased hopes of a cut in US interest rates, while investors also looked ahead to a similar move from the European Central Bank tomorrow.
The pan-European STOXX 600 gained almost 0.5% to 519, rebounding from previous losses.
Spain's benchmark IBEX index outperformed the region's bourses, up 0.72% as survey data showed the services sector had produced its steepest rise in activity for a year.
“The wheel of speculation over when interest rate cuts will come in the US has stopped in a more positive position, buoying sentiment,” said Hargreaves Lansdown analyst Susannah Streeter.
“Weaker JOLTS jobs data indicates that the negotiating stance of American employees for higher wages is more fragile, adding to hopes that stubborn price pressures will ease. With interest rate cuts spied again on the horizon, Wall Street ended in more upbeat territory, and more optimism is washing through into trading in Europe.”
Data from a closely watched private sector purchasing managers’ survey showed the services sector notched up the fastest growth in 10 months in May. The Caixin/S&P Global Services PMI rose to 54, from 52.5, with anything over 50 indicating expansion.
In equity news, shares in Elekta slumped 14% after the Swedish radiation therapy equipment maker posted bigger-than-expected drop in Q4 profit.
Zara-owner Inditex jumped 4.7% on better-than-expected current trading numbers in its first-quarter results.
British gas owner Centrica fell despite saying all its business units would hit medium-term earnings targets two years early.
Reporting by Frank Prenesti for Sharecast.com