Europe: Stocks mark positive end to volatile week

EUROPEAN shares rose on Friday (May 13), closing higher for the first time in 5 weeks, as a bout of bargain hunting took over after worries about aggressive monetary policy tightening and slowing global growth.

The pan-European Stoxx 600 index rose 2.1 per cent, with travel and leisure, banks and personal and household stocks leading gains.

“Equity markets are showing strong gains as bargain hunters have snapped up stocks,” said David Madden, market analyst at Equiti Capital.

“This week, markets were plagued by fears of high inflation, worries about more interest rate hikes, and concerns about the ongoing war in Ukraine.”

Global markets, particularly US stocks, have gyrated wildly this week as investors feared that tightening financial conditions, with the Federal Reserve preparing for a series of interest rate hikes to contain a surge in inflation, will tip the economy into recession.

Fed Chair Jerome Powell repeated on Thursday his expectation that the central bank will raise interest rates by half a percentage point at each of its next 2 policy meetings, easing worries about a bigger 75 basis point rate hike that some investors were expecting.

Including Friday’s gains, the Stoxx 600 snapped its 4-week losing streak.

“The risks are to the downside with huge jump in economic uncertainty and large real disposable income shocks for households,” Deutsche Bank economists said in a note.

Among individual stocks, Deutsche Telekom gained 2.1 per cent after it raised its annual earnings guidance.

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Wind turbine maker Vestas dropped 4.4 per cent, after Berenberg downgraded the stock to “hold”.

Shares of French retailer Casino jumped 9.9 per cent after French energy giant TotalEnergies and power company Engie were eyeing the acquisition of its renewable energy unit valued at around 1.5 billion euros (S$2.2 billion), reported Les Echos.

Norwegian Air gained 2.4 per cent, as the airline posted a quarterly loss and said the surge in fuel costs would partly offset the effects of increased summer bookings. REUTERS