European markets started the session in positive territory as investors prepared for the European Central Bank’s final monetary policy decision of 2024.
The pan-European Stoxx 600 index gained 0.08% by 9:00 a.m. London time, with oil and gas stocks leading the way, up 0.92%. Media stocks lagged, falling 0.28%.
In the UK, the FTSE 100 climbed 0.19%, driven by a strong performance from Diageo.
The maker of Smirnoff and Guinness saw its stock jump 3% to 2569p after UBS upgraded it from “Sell” to “Buy” and raised its price target from 2300p to 2920p.
Meanwhile, Associated British Foods slid 53p to 2139p as its shares went ex-dividend, and tobacco firms British American Tobacco and Imperial Brands lost 2%.
Currys impresses with robust results
In the FTSE 250, Currys emerged as a standout performer, surging 8% to 85.1p.
The electronics retailer’s half-year results exceeded market expectations, reflecting improving business performance.
Richard Hunter, head of markets at Interactive Investor, said, “Currys has posted an update which is positive on any number of fronts, and its confidence for future prospects has been mirrored by a strong market reception to the numbers.”
ECB poised for a modest rate cut
As the European Central Bank gears up for its last meeting of the year, economists widely expect a 25-basis-point cut to its deposit facility rate, bringing it to 3%.
This would mark the fourth quarter-point reduction of 2024, following an easing cycle that began in June.
Key discussions during the meeting are likely to center around whether interest rates are approaching “neutral territory,” where monetary policy neither stimulates nor restricts economic growth.
ECB policymakers remain divided, with some advocating for more aggressive cuts if inflation continues to decline and economic growth remains subdued.
The ECB will also release updated macroeconomic projections on growth and inflation, which could provide further clues about the trajectory of its rate policy heading into 2025.
Swiss National Bank surprises with bold rate cut
The Swiss National Bank (SNB) caught markets off guard by implementing a 50-basis-point rate cut, bringing its key interest rate to 0.5%.
This exceeded expectations of a smaller 25-basis-point reduction.
In its first meeting under new Chair Martin Schlegel, the SNB acknowledged easing inflationary pressures and the continued strength of the Swiss franc as key factors in its decision.
“Underlying inflationary pressure has decreased again this quarter. The SNB’s easing of monetary policy today takes this development into account,” the bank stated.
The SNB’s revised inflation forecast sees annual rates of 1.1% in 2024, 0.3% in 2025, and 0.8% in 2026, assuming the policy rate remains at 0.5%.
Global markets in focus
Globally, markets remained attentive to inflation data from the US ahead of the Federal Reserve’s policy meeting next week.
While consumer prices rose in line with expectations, traders anticipate the Fed will follow suit with its own rate cut.
In Asia-Pacific, equity markets were mostly higher, buoyed by Wall Street gains that saw the Nasdaq Composite hit an all-time high, closing above 20,000 for the first time
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