Rate Cuts Fail To Spur European Stocks

Europe's main stock markets were little changed Thursday despite interest rate cuts by the eurozone and Swiss central banks as policymakers warned of economic and political woes in the region and beyond

London, (UrduPoint / Pakistan Point News - 12th Dec, 2024) Europe's main stock markets were little changed Thursday despite interest rate cuts by the eurozone and Swiss central banks as policymakers warned of economic and political woes in the region and beyond.

Wall Street shares were mixed at the open, with the tech-heavy Nasdaq retreating a day after topping 20,000 points for the first time.

The Paris CAC 40 was up 0.1 percent in afternoon deals but the Frankfurt DAX was flat after the European Central Bank (ECB) cut its interest rates by 25 basis points, marking its third consecutive reduction and fourth this year overall.

ECB President Christine Lagarde said policymakers discussed political "uncertainty" in Europe and the United States before deciding on the cut.

She mentioned "political situations in some of the member states" and the US presidential election won by Donald Trump.

Lagarde warned that the eurozone economy was "losing momentum" and that "the risk of greater friction in global trade could weigh on euro area growth".

Earlier, the Swiss National Bank surprised markets with a 50-basis-point reduction in its rate, citing slowing inflation and "uncertainty" over the impact of Trump's economic policies and Europe's political upheaval.

The franc fell against the dollar and the euro following the announcement.

With growth still weak and France and Germany in political crises there have been calls for the ECB to move faster.

Germany is heading towards early elections in February following the collapse of Chancellor Olaf Scholz's coalition government as Europe's biggest economy falters.

In France, President Emmanuel Macron is due to appoint a new prime minister after MPs toppled the government of Michel Barnier last week.

Sylvain Broyer, an economist at S&P Global Ratings, said Europe was suffering from "a real crisis of confidence whose roots run deep and go beyond economic factors".

"The ECB must react and speed up the pace of rate cuts, unless low confidence derails the nascent recovery and jeopardizes the return to price stability," he said.

- US inflation -

Investors are also focused on the US Federal Reserve's own interest rate decision next week.

Consumer inflation data on Wednesday was in line with expectations as it inched slightly higher in November to 2.