By Shashwat Chauhan, Amir Orusov and Purvi Agarwal
(Reuters) -European shares closed at a record high for a second session on Thursday, driven by a rally in industrials and chip-related stocks, while expectations of U.S. interest rate cuts this month also buoyed sentiment.
The pan-European STOXX 600 index was up 0.5% at its record close, having earlier also hit an all-time intraday high. Most regional bourses also climbed, with Germany leading gains with a 1.3% increase.
Industrial stocks were the biggest boost to the index, up 1.5%, with heavyweights such as Siemens up 4.2% and Schneider adding 2.3%.
Technology stocks rose 2.3%, tracking gains in global chip-related stocks. 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 6.5%, pushing the main Dutch index to a record high.
“I see further room (for the rally) to run judging from the breadth in the tech rally, as it’s also the average tech stock participating as well,” said Lale Akoner, global market analyst at eToro.
Autos climbed 2.4%, boosted by an 8.3% 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 2.7% after HSBC upgraded its rating on the Italian carmaker to “buy” from “hold”.
Healthcare stocks extended 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 are also watching any developments related to the U.S. government shutdown, which could delay the release of Friday’s key jobs data and heighten uncertainty around the Fed’s ability to assess the state of the economy.
Prospects of softer monetary policy by the Fed have 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 CME’s FedWatch Tool.
The STOXX is up more than 11%, underperforming the U.S. S&P 500, which also hit record highs in the last session and is up 14% for the year.
Credit data company Experian slipped 4.2% after FICO said it was launching a cost-cutting direct licence programme for mortgage lending.
Tesco gained 5.3% after the British supermarket group raised its full-year profit forecast.
Thyssenkrupp fell 4.1% after Czech billionaire Daniel Kretinsky agreed to sell his 20% stake in the company’s steel unit and scrapped plans for a joint venture for the business.
(Reporting by Shashwat Chauhan and Purvi Agarwal in Bengaluru and Amir Orusov in Gdansk; Editing by Tomasz Janowski, Shilpi Majumdar and Jan Harvey)
