Fed rate hike bets boost European stocks
European stocks posted their best weekly performance in nearly eight months on Friday, largely on bets on smaller rate hikes by the U.S. Federal Reserve and the easing of COVID-19-related restrictions in China.
The STOXX 600 index ended the session up 0.1% to an 11-week high at 432.26, posting a weekly gain of 3.66%, with financials, mining and retail stocks leading the way. earnings.
The weekly gains mostly came after data on Thursday showed US consumer prices fell more than expected in October, suggesting the Fed may be tempering the scale of its future interest rate hikes. .
“The market is just waiting for signals that the initial interpretation of the US CPI [consumer price index] yesterday’s numbers are the good ones,” said Andrea Cicione, head of research at TS Lombard.
In the UK, the export-focused FTSE 100 fell 0.78% to 7,318.04 on Friday, hurt by a stronger pound, after data showed a weaker-than-expected contraction in the British economy, although mid-cap stocks marked their best week in nearly two years. The index was down 0.23% from the previous week.
China-exposed luxury giants Hermes International SCA, Kering SA and LVMH Moet Hennessy Louis Vuitton SE jumped between 2.4% and 2.8%. Richemont SA, the maker of Cartier necklaces and IWC Schaffhausen watches, climbed 10.50% on better-than-expected sales and margins.
European base resources jumped 2.6% as base metal prices rose.
“Markets welcome looser COVID rules in China, but infection numbers are high and vaccination rates are low, meaning the road to fully removing restrictions still seems long,” the strategists wrote. ‘ing in a note.
An upbeat earnings season and hopes of lower Fed rate hikes helped the STOXX 600 extend gains to a fourth straight week as investors brushed aside worries about the economy entering a recession. European economy.
However, analysts said that earnings growth could dry up within months as high inflation and recession rattle the economy.
German inflation continued to rise at an alarming rate as data showed that consumer prices, harmonized for comparison with other European countries, last month were up 11.6% in year-on-year.
Among stocks, Europe’s largest mobile tower operator, Spain’s Cellnex Telecom SA, gained 1.6% after posting a 45% rise in nine-month core earnings.
Delivery Hero SE jumped 8.8% as analysts raised price targets on shares of the German food delivery company a day after forecasting a positive adjusted profit margin for next year and reassuring investors. investors on achieving profitability.
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