November 27, 2022

Eureka News

All the News All the Time

European stocks rise as luxury stocks, miners rebound amid Fed pivot hopes. From Reuters

2 min read

©Reuters. The graphic of the German share index DAX is pictured on the stock exchange in Frankfurt am Main on October 31, 2022. REUTERS/Staff

By Shreyashi Sanyal

(Reuters) – European stocks rose on Tuesday, boosted by mining companies and luxury stocks, amid growing hopes that the US Federal Reserve would slow the pace of its rate hikes next month.

The pan-European index was up 1.2% by 0905 GMT, starting November on a solid footing and trading at its highest level in more than six weeks.

The index gained 1.2% after luxury giants including LVMH, Kering (EPA:), Hermes International (OTC:) and Pernod Ricard (EPA:) rose between 2.2% and 3.9%.

Rumors, based on an unconfirmed note circulating on social media that China was planning a reopening of strict COVID curbs in March, sparked a rush for such luxury names, which have been badly hit by China.

“There are social media reports of China easing its zero-COVID policy and look at how much relief it has brought to markets hungry for some good news from China,” said Giles Coghlan, Chief Market Analyst at HYCM.

Mining companies in Europe rose 3.0%, while oil and gas stocks rose 1% as oil and industrial metals prices rose despite the dollar’s decline. [O/R] [MET/L]

Global stock markets braced themselves for the two-day Fed meeting, with investors pricing in a 75 basis point hike in interest rates on Wednesday, but hopes remain that the central bank will announce a smaller 50 basis point hike in December.

“All eyes are on the Fed so I expect markets to lock up today… If the Fed surprises with a more dovish stance then I expect strong move higher in risky assets and a much lower dollar,” Coghlan said.

A better-than-expected earnings season recently helped lift the STOXX 600, but concerns remain that the eurozone is slipping into recession as the European Central Bank has promised further monetary tightening to stem record-high inflation fight.

ECB President Christine Lagarde said the central bank must keep raising interest rates to fight inflation even as the likelihood of a recession in the euro zone has increased. The ECB doubled its deposit rate to 1.5% last week.

Among other stocks, Italy’s Monte dei Paschi di Siena rose 5.3% as its capital raise of up to 2.5 billion euros ($2.5 billion) was 93% covered so far.

Dutch specialty chemicals maker DSM fell 1.1% as it lowered its earnings outlook for 2022.

Copyright © All rights reserved. | Newsphere by AF themes.