European shares rally as investors focus on dovish BoE

by Jonathan Adams

The Stoxx 600 index rose 0.87% at 457.04, CAC 40 added 1.22% to 6,631.15, FTSE 100 gained 0.51% to 7,109.97 and DAX gained 0.86% to 15,589.23

European shares rallied as investors focused on a dovish outcome to the Bank of England’s (BoE) policy meeting.

The Monetary Policy Committee warned against a “premature tightening” of monetary policy.

Markets throughout Europe and the US are enjoying one of the more memorable days in a week that has largely been dominated by indecision and uncertainty, said IG senior market analyst Josh Mahony.

The Bank of England has been one of the main determinants of that positive outlook, with the MPC allaying fears that the recent hawkish shift from the Fed is the first in a wave of many such moves, Mahony said.

The pan-European Stoxx 600 index rose 0.87% at 457.04 and France’s CAC 40 added 1.22% to 6,631.15.

Britain’s FTSE 100 gained 0.51% to 7,109.97 alongside after the BoE held interest rates at the historic low of 0.1% despite concerns that inflation could soar due to the pandemic.

German’s DAX gained 0.86% to 15,589.23 after business confidence data showed more optimism.

The IFO business climate index advanced to 104 in June, up from 102.9 in May, ahead of the 103.6 increase forecast.

The US Fed’s annual bank stress test results were scheduled for release after the bell on Thursday.

In equity news, Swiss laboratory instrument maker Tecan Group’s shares led the Stoxx, up 11.6%, after agreeing to buy US medical devices and life sciences instruments group Paramit Corp for $1bn.

Distribution specialist Bunzl advanced after the company said first-half revenue is expected to rise by nearly 1% at actual exchange rates and 6% – 7% at constant rates as a recovery in its base business, including the food service and retail sectors, was largely offset by an anticipated drop in Covid-related orders.

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