European stock markets surged to record highs as investors grew increasingly confident about further interest rate cuts in the US and the Eurozone in the coming months.
The Stoxx 600 index closed up 0.5%, bolstered by new data that reinforced expectations of additional US rate cuts. Key indicators for US core inflation and consumer spending showed slight increases in August, highlighting a cooling economy.
Luxury goods companies such as Richemont, Hermès International, and Kering continued their upward trend, while chemical and automotive stocks also ranked among the top performers. Europe's largest luxury stock, LVMH, gained additional momentum following an announcement that it will invest in designer outdoor brand Moncler SpA. This deal will grant LVMH a seat on Moncler's board. Moncler's shares jumped by as much as 15%.
"This is one of the turning points of the year," said David Kruk, trading head at La Financiere de L’Echiquier in Paris. "I feel like everyone is going with the flow now," he added, referring to the buying spree in cyclical stocks.
In contrast, the healthcare sector, traditionally viewed as a safe haven, lagged behind. Novo Nordisk's shares fell after JPMorgan warned that the Danish pharmaceutical company's third-quarter earnings might disappoint due to underwhelming sales of its weight-loss drug Wegovy.
Although Europe's slowing economic growth remains a market pressure point, the prospect of rate cuts provided a boost. Inflation rates in France and Spain fell below 2%, increasing expectations that the European Central Bank will accelerate rate cuts.
