By Shashwat Chauhan and Amir Orusov
(Reuters) -European shares surged to a record high on Thursday, driven by a global rally in chip-related stocks, while sentiment remained buoyant amid expectations that the U.S. Federal Reserve will cut interest rates later this month.
The pan-European STOXX 600 index gained 0.7% to 568.7 points by 0845 GMT, hitting an all-time high. Most regional bourses also climbed, with Germany leading gains with a 1.3% increase.
Technology stocks added 2.3%, tracking overnight gains on Wall Street. Sentiment was further boosted after Korea’s Samsung Electronics and SK Hynix signed letters of intent to supply memory chips for OpenAI’s data centres.
ASML gained 4.3% and ASMI jumped 6.2%, pushing the main Dutch index to a record high.
“In the long term, we’re positive on technology stocks within Europe because of AI,” Anthi Tsouvali, multi asset strategist at UBS, said, expecting the sector to continue to do well “even though it’s a small part of the global IT universe”.
Autos climbed 2.3%, boosted by a 7% gain in Stellantis after market data showed an improved trend in new car sales for the group in Italy and the U.S.
Ferrari gained 2.8% after HSBC upgraded its rating on the Italian carmaker to “buy” from “hold”.
Healthcare stocks rose 0.6%, extending their rally from the previous session after a U.S.-Pfizer deal on prescription drug prices on Tuesday helped reduce some uncertainty in the sector.
Investors will also be closely watching for any developments related to the U.S. government shutdown, which could delay the release of key jobs data later this week and heighten uncertainty around the Fed’s ability to assess the state of the economy.
Prospects of softer monetary policy by the Fed has been the latest catalyst for European stocks, with banks and industrials among the top performing sectors so far this year.
A weak private payrolls report on Wednesday has pushed market pricing for a 25-bps rate cut in October to 99%, up from nearly 86% a week ago, according to the CME FedWatch Tool.
The STOXX is up more than 11% so far this year, compared with a more than 14% gain in the U.S. S&P 500, which also hit record highs in the last session.
Credit data company Experian slipped 5.5% after FICO said it was launching a cost-cutting direct licence programme for mortgage lending.
Tesco gained 4.1% after the British supermarket group raised its full-year profit forecast.
(Reporting by Shashwat Chauhan in Bengaluru and Amir Orusov in Gdansk; Editing by Tomasz Janowski and Shilpi Majumdar)
