ECB Rate Cut Sparks Eurozone Bond Party & Wise Stock Surge!

European Stock Markets Rise Following ECB Rate Cut; Wise Soars After Earnings

European stock markets responded positively on Thursday following the European Central Bank's (ECB) decision to cut interest rates by 25 basis points. The widely anticipated move triggered a rally in Euro zone government bonds, reflecting investor sentiment and market adjustments.

The ECB's decision to reduce its key interest rate to 2% had been largely factored into market expectations. LSEG data indicated that traders had assigned a greater than 90% probability to the quarter-point cut prior to the official announcement.

Here's a breakdown of how key Euro zone government bonds reacted:

• German 10-year government bonds: Yield fell by 4 basis points. These bonds are considered a benchmark for the euro zone.
• French 10-year government bonds: Yield decreased by 3 basis points at 1:43 p.m. in London.
• Italian 10-year government bonds: Yield experienced a reduction of 5 basis points.
• Spanish 10-year bond yields: Saw a decrease of 4 basis points.

It's crucial to remember that bond prices and yields have an inverse relationship. Increased demand for bonds typically drives prices up and subsequently pushes yields down.

Beyond the bond market, fintech firm Wise experienced a significant surge, closing up 7.1% after the release of its earnings report. This positive performance further contributed to the overall upbeat mood in the European markets.

In conclusion, the ECB's rate cut, coupled with positive earnings reports from companies like Wise, painted a picture of cautious optimism in the European financial landscape. While challenges undoubtedly remain, the market's initial reaction suggests a willingness to embrace measured monetary policy adjustments and reward strong corporate performance. The coming weeks will be telling as to whether this positive momentum can be sustained.

Tags: Euro zone bonds, ECB rate cut, Interest rates, German bonds, Bond yields, French bonds, Italian bonds, Spanish bonds, European markets, Bond rally

Source: https://www.cnbc.com/2025/06/05/european-markets-on-thurs-june-5-ecb-rate-cut-stoxx-600-ftse-dax.html