The Business Times

Europe: Stocks clock best week in nearly eight months

Published Sat, Nov 12, 2022 · 05:56 AM

EUROPEAN shares notched their best weekly performance in nearly eight months on Friday (Nov 11), largely driven by bets of smaller rate hikes by the Federal Reserve and easing Covid-19 curbs in China.

The Stoxx 600 ended the session up 0.1 per cent at a 11-week high, with financial services, mining and retail stocks leading the gains.

The index marked weekly gains of 3.7 per cent, mostly after data on Thursday showed US consumer prices cooled more than expected in October, leading to expectations that the Federal Reserve could temper its size of future interest rate hikes.

“The market’s just waiting for signals that the initial interpretation to the US CPI numbers yesterday is the correct one,” said Andrea Cicione, head of research at TS Lombard.

Further, news of China easing some of its strict Covid-19 rules kept investor sentiment buoyant, boosting shares of miners and luxury goods retailers.

China-exposed luxury giants Hermes International, Kering, and LVMH jumped between 2.4 per cent and 2.8 per cent. Richemont too soared 10.5 per cent on better-than-expected sales and margins.

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The European basic resources jumped 2.6 per cent as prices of base metals shot up.

“Markets are welcoming looser Covid-19 rules in China, but infection numbers are elevated and vaccination rates are low, which means that the path to complete removal of restrictions still looks long,” strategists at ING wrote in a client note.

An upbeat earnings season and hopes of smaller rate hikes from the US central bank have helped the benchmark index stretch gains to a fourth straight week, as investors set aside concerns about the European economy slipping into recession.

Analysts said this profit growth could, however, dry up in Europe in a matter of months as high inflation and recession rattle the economy.

Germany’s inflation continued to rise at an alarming pace as data showed consumer prices, harmonised to compare with other European countries, was 11.6 per cent higher year-on-year in October.

Among stocks, Europe’s largest mobile phone tower operator, Spain’s Cellnex, gained 1.6 per cent after posting a 45 per cent rise in nine-month core earnings.

Delivery Hero jumped 8.8 per cent as analysts raised their price targets on the German takeaway food company’s shares a day after it forecast positive adjusted core profit margin for next year and reassured investors of reaching profitability. REUTERS

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