Global Markets – European stocks set for best week in months
LONDON/TOKYO: European stocks were set for their best weekly performance in two months, buoyed by hopes that the European Central Bank is ending its rate rise cycle and data that suggested China’s wobbly economy may be regaining some momentum, according to Reuters.
Europe’s Stoxx 600 index, which rose 1.5 percent on Thursday, gained a further 0.7 percent on Friday to put it on track for a 2.1 percent weekly gain, the most since the week ending July 14.
But futures trading suggested Wall Street equities would not extend the rally, as the mood in New York remained cautious ahead of the Federal Reserve’s monetary policy meeting next week and investors weighed divergent outlooks for the US and euro zone.
The European Central Bank hiked its key interest rate to a record 4 percent on Thursday and warned it would remain at that level until above-target inflation was dealt with.
Still, markets clung to hopes that the ECB, as the euro zone economy weakens, will wait for more evidence its monetary tightening so far has slowed the economy and then tilt towards rate cuts.
“The key thing for markets is that a dovish hike suggests we are getting closer to the end,” said Parisha Saimbi, G10 FX rates strategist at BNP Paribas in London. “They are (also) going to wait for the pass through of monetary policy so far, and to this extent equities are performing well.”
Also bolstering European investors’ risk appetite on Friday, data showed Chinese gauges of retail sales and industrial output for August topped economists’ expectations, although its property slump deepened, threatening to undercut a flurry of support measures.
