European stocks rose on Thursday after a weak start to the new year, with defensive sectors such as banking and utilities and pharmaceuticals rising strongly.
The Stoxx Europe 600 Index closed up 0.7%, and gains accelerated during afternoon trading. Bank stocks led the way, and pharmaceutical-weighted stocks Novartis and Novo Nordisk were the main contributors to the increase.
The minutes of the latest Federal Reserve meeting show that officials expect interest rates to remain high for a period of time, prompting investors to evaluate the future of US monetary policy. France's economic data is also receiving attention. The data showed that inflation in France rose slightly in December as service prices accelerated and energy costs soared.
Among other individual stocks, Evotec SE plummeted, and the company announced that Werner Lanthaler would step down as CEO. JD Sports Fashion Plc plummeted, the biggest drop in history. The company unexpectedly issued a profit warning, putting pressure on Adidas and Puma as well. Next Plc rose after the UK home and clothing retailer raised its earnings forecast.
The European stock market had a poor start to the year as traders lowered their expectations of interest rate cuts and waited for the central bank to send a more clear signal that they are ready to move to a more relaxed policy. Friday's US employment report may provide clues about the Federal Reserve's position, and investors will also pay attention to the Eurozone inflation report.
“Given that investors currently have few long positions, if there are no further signs that the Goldilocks situation can overwhelm the bears, then confidence in rising will remain sluggish,” said Viraj Patel, a global macro strategist at Vanda Research.
Shares of European chipmakers such as ST and Infineon fell after autonomous driving technology company Mobileye Global Inc. predicted revenue in 2024 far below analysts' expectations.