Europe markets close higher after ECB rate cut; Stoxx 600 hits new record high

European markets closed at record highs Thursday as investors reacted to the European Central Bank’s fifth consecutive interest rate cut.

The pan-European Stoxx 600 provisionally closed 0.9% higher at 539.06 points, notching a new record close as sentiment continued to recover from a global technology sell-off on Monday.

The ECB kicked off its first meeting of 2025 with a 25-basis-point interest rate cut Thursday. The move brought the central bank’s key overnight deposit facility rate to 2.75%, marking its fifth cut since the bank began easing monetary policy last June.

Market watchers expect further easing this year despite euro zone inflation ticking upwards over the past few months; activity in the single currency area’s manufacturing and services sectors remains broadly subdued and consumer confidence is below its long-term average, European Commission data shows.

Against this backdrop, investors are assessing the latest economic data from France and Germany, which both contracted in the fourth quarter, while the euro zone stagnated.

German lender Deutsche Bank kicked off a flurry of earnings, reporting a sharper-than-expected fall in fourth-quarter profit, driving its shares down 3%.

Oil giant Shell meanwhile saw shares gain almost 3% after posting a significant drop in annual profit following a year of lower crude prices. The company announced a 4% increase in dividend per share and launched another share buyback program of $3.5 billion.