Europe: Stocks snap six-day losing streak in turbulent session

EUROPEAN stocks climbed on Thursday, rebounding from a near two-year low touched earlier in the session after hot US inflation data spurred bets of aggressive interest rate hikes from the Federal Reserve.

The region-wide Stoxx 600 index shuttled between positive and negative territory throughout the session before closing up 0.9 per cent and snapping a six-day losing streak.

Data showed US consumer prices increased more than expected in September, bolstering the case for a fourth straight 75 basis point rate hike from the Fed next month.

“The fact that (stocks) have rebounded and rebounded as strongly as they have suggests that this was more of a technical buying, rather than a fundamentally-driven move,” Craig Erlam, senior market analyst at Oanda, said.

The Stoxx 600 had fallen 4.3 per cent in the previous six sessions with markets worried about central banks’ aggressive policy moves to curb soaring prices and recent warnings from the International Monetary Fund and the World Bank about a recession.

“We’ve seen dip buyers jump back in and test that theory that maybe this is a bit of a bottom for the market. I’m not sure if it’s going to pay off because that’s really not the kind of inflation report the market wanted to see,” Erlam said.

Equity markets were buoyed earlier in the day following reports that the UK government was discussing making changes to the fiscal plan announced last month that had sparked a rout in bond markets.

Investors are now keenly watching third-quarter earnings reports to see how businesses are dealing with cost pressures and to gauge guidance from companies amid growing recession concerns.

“It (the rebound) may be investors waiting to see what happens with earnings,” said Shawn Cruz, head trading strategist at TD Ameritrade in Chicago, Illinois.

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“Two companies with a very big footprint across the consumer landscape came out and reported upbeat guidance and are doing well,” Cruz said, referring to upbeat results from Domino’s Pizza and Walgreens Boots Alliance on Thursday.

Among Stoxx sectors, financials were the biggest boost to the index, while tech stocks came off their lowest since May 2020 hit earlier in the session and were up 0.3 per cent.

Gains in energy and industrials also boosted the index.

Chipmakers including Infineon and ASML also reversed session losses to gain between 0.9 per cent and 3 per cent.

Norwegian aluminium producer Norsk Hydro jumped 6.7 per cent after reports that the United States was weighing restricting imports of Russian aluminium. REUTERS