European stocks: European shares close shy of record after ECB delivers first rate-cut in five years

Estimated read time 7 min read
European shares closed higher on Thursday, boosted by banking, technology and healthcare stocks, though they finished below session highs after the European Central Bank 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% 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.

“Arguably the ECB has been cornered to a rate cut today which reduced somewhat its credibility in relation to ‘data dependency’,” said Janet Mui, head of market analysis at wealth manager RBC Brewin Dolphin.

“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”In new forecasts, the ECB said it expected inflation to average 2.2% in 2025 – up from a previous estimate of 2.0% and meaning it was now seen holding above the central bank’s 2% target well into next year.ECB President Christine Lagarde said that only one ECB Governing Council member had opposed the bank’s decision to cut interest rates earlier in the day.European lenders led sectoral gains, rising 1.7%, while healthcare was another boost, advancing 1.4% as Novo Nordisk rose almost 4% to hit a record high.

Technology stocks closed 1.2% higher, holding near its highest since December 2000, with German enterprise software giant SAP rising 3.6% after CEO Christian Klein gave encouraging guidance for 2026 and 2027. The stock topped Germany’s DAX 40, which closed 0.4% up.

Dutch semiconductor firm ASML also extended its gains from Wednesday, rising 1.5%.

Rate-sensitive sectors like utility and real estate were amongst the laggards, falling 0.9% and 0.6%, respectively.

Among other stocks, Nemetschek advanced 6.2% as the German software developer agreed to buy U.S. software provider GoCanvas.

On the data front, euro zone retail sales fell more than anticipated in April, declining 0.5% against expectations of a 0.3% decline.

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