Europe midday: Stoxx pushes beyond 542 as records tumble
By Frank Prenesti
Date: Friday 31 Jan 2025
(Sharecast News) - European markets on Friday strode into record territory as investors welcomed the latest rate cut from the European Central Bank and dovish comments from the central bank's president Christine Lagarde.
The pan-regional Stoxx 600 index breached 542 for the first time and was up 0.42% at 541.28 at 1146 GMT. Britain's FTSE, Germany's DAX and Spain's IBEX also hit fresh intra-day highs.
Investors welcomed the ECB's expected quarter-point interest rate cut on Thursday, but it was Lagarde's comments on weakness in the eurozone economy that raised bets the bank would impose three more cuts to 2% by the end of the year.
In economic news, retail sales in Germany unexpectedly dropped by their most in more than two years in December, according to the Federal Statistical Office (Destatis) on Friday.
Retail sales fell by 1.6% over the month of December in real terms (adjusted for price), following a revised 0.1% decline in November, making the largest monthly drop since October 2022. The consensus forecast was for a monthly increase of 0.2%.
The gold price recorded an all-time high on Thursday, hitting $2,820 an ounce as investors fretted over the potential re-emergence of inflation with US President Donald Trump threatening tariffs that would likely push up prices for US consumers.
"Trump wants to see US producers benefit instead or at least foreign manufacturers in countries without big goods trade surplus with America. But this is wishful thinking, especially in the short term, as such trade changes can take years, if they are possible," said Hargreaves Lansdown analyst Susannah Streeter.
"Instead, it's likely that US importers will simply put the burden of extra costs onto their customers in the form of higher prices. This risks pushing up inflation again, an eventuality the Federal Reserve is well aware of, hence its more cautious stance this week when it comes to interest rate cuts."
In equity news, UK engineering business Smiths Group surged after announcing plans for a breakup through the sale of electronic connectors unit and a demerger or disposal of its detection operation as part of a strategic review that includes extending its share buyback to £500m.
Novartis rose after the drugmaker's quarterly adjusted net income easily beat estimates.
The world's largest wind energy company Orsted rose slightly after replacing chief executive Mads Nipper, who stepped down to be replaced by company insider Rasmus Errboe.
Reporting by Frank Prenesti for Sharecast.com
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