Europe: Shares rally on rate pause hopes, upbeat results
EUROPEAN shares climbed over 1 per cent on Thursday, led by rate-sensitive real estate and technology stocks, on growing optimism that central banks are done tightening credit after the US, UK and Norway kept interest rates unchanged this week.
The pan-European Stoxx 600 index closed 1.6 per cent higher, touching a fresh two-week high.
UK’s FTSE 100 gained 1.4 per cent after the Bank of England held interest rates at a 15-year peak, while Norwegian stocks climbed 0.7 per cent after Norges Bank also kept rates steady.
“The Bank of England may have kept rates on hold, but we’re seeing the first signs of pushback against financial markets which are starting to price in rate cuts for 2024,” said James Smith, developed markets economist at ING Economics, in a note.
“We think investors are right to be thinking that way and we expect the first cut over summer next year.”
Overnight, Fed Chair Jerome Powell maintained the option of another hike if progress on inflation stalls, but said that a rise in market-based interest rates may begin to weigh on the economy.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
“Powell acknowledged that a rise in long-term yields have tightened financial conditions,” said Mohit Kumar, chief economist Europe at Jefferies. “Our read of the press conference is that it supports our view that the Fed is done with hikes.”
Real-estate stocks rose 5.2 per cent to lead sectoral gains, while technology climbed 2.7 per cent.
Data showed euro zone manufacturing activity slowed again last month in a broad-based downturn, with new orders contracting at one of the steepest rates since 1997. And German unemployment rose more than expected in October, showing some cracks in an otherwise resilient labour market.
Earnings beats also lifted sentiment.
Finnish residential real estate group Kojamo rallied 16.7 per cent to the top of the Stoxx 600 index after posting better-than-expected quarterly results.
Swiss staffing company Adecco Group jumped 13.9 per cent on a better-than-expected third-quarter net profit.
Ferrari gained 5.6 per cent after raising its 2023 earnings outlook, lifting the automobiles index 3 per cent.
Shell gained 4.2 per cent following in-line third-quarter earnings of US$6.2 billion and news of an increased share buyback programme.
Novo Nordisk rose 3.2 per cent as it estimated another year of double-digit sales growth for its two most popular drugs, even after cautioning that supply of its Wegovy weight-loss injection would remain limited in the short to medium term.
Meal delivery firms Just Eat Takeaway Delivery Hero, HelloFresh Deliveroo gained between 1.2 per cent and 7.9 per cent following US peer DoorDash’s strong fourth-quarter core profit forecast.
ING fell 1.8 per cent, with analysts citing a poor beat in third-quarter net profit and a net interest income miss. REUTERS
Share with us your feedback on BT's products and services
