Irish shares gain along with rest of Europe as rate cut expectations rise

Investors tweaked their views about the European Central Bank's policy path, pricing in a 90% chance of an ECB rate cut by June from less than an 80% chance earlier this week

'Central banks look to be on the verge of declaring victory in their battle over inflation.' Picture: Hannelore Foerster/Bloomberg via Getty Images

Irish shares again joined in a rally for European shares as stock markets across the continent reached new record highs driven by rate cut hopes. 

The Iseq index of shares rose by 0.3% in the session, thanks to strong performances by two of the three stock market-listed banks. AIB and Bank of Ireland rose by 5% and 3.5%, respectively, while Permanent TSB slipped 1%. 

The Iseq nonetheless underperformed the Europe-wide of index of the continent's 600 most valuable companies as the Stoxx 600 index gained 0.9% on the day. 

Companies in the technology and mining industries were in the lead, as dovish signals from a slew of major central banks spurred a risk-on mood among investors.

Technology shares in Europe led the charge, with a jump of more than 3% as investors gravitated towards risky assets after the US Federal Reserve stuck to its view of three interest rate cuts this year. 

Also boosting the index were gains in European semiconductor stocks, including heavyweight ASML after US chipmaker Micron's strong third-quarter revenue forecast.

Britain's Ftse 100 index outperformed regional peers to climb nearly 2% after the Bank of England held interest rates steady and governor Andrew Bailey said Britain's economy was "moving in the right direction" for the central bank to start cutting interest rates.

Meanwhile, in a surprising turn of events, the Swiss National Bank cut its main interest rate by 25 basis points to 1.5%, making it the first major central bank to dial back tighter monetary policy aimed at tackling inflation. 

"Central banks look to be on the verge of declaring victory in their battle over inflation. Some banks — such as the Swiss National Bank — have already started cutting rates," said Hussain Mehdi, director of investment strategy at HSBC Asset Management. 

Investors also tweaked their views about the European Central Bank's policy path, pricing in a 90% chance of an ECB rate cut by June from less than an 80% chance earlier this week. 

• Irish Examiner and Reuters