The Stoxx 600 index was 1.58 per cent higher to 443.47, with gains of around 2 per cent for most major indices across Europe
European stocks gained for the fourth consecutive day on Thursday, on hopes that the Fed may finally be done with its rate hikes.
Stock markets have a definite groundhog feel to them today, as once again hopes of a peak in interest rates have seen stocks rally, said Chris Beauchamp, senior market analyst at IG.
This rally comes almost on cue in seasonality terms, but is doubtless based on expectations that rates will stop here, and in due course come down. Investors have been disappointed before on this front nevertheless, so need to resist the temptation to charge back into stocks too quickly.
The Stoxx 600 index was 1.58 per cent higher to 443.47, with gains of around 2 per cent for most major indices across Europe.
The pan-European index had increased every day this week after reaching a ten-month low last Friday.
In parallel, the yield on the benchmark 10-year German bund was dropping 4 bps to 2.72 per cent and euro/dollar was 0.48 per cent higher to 1.0628.
Wall Street stocks gained on Wednesday evening after the Federal Open Market Committee opted to keep interest rates on hold for the second straight meeting. In a press conference, chair Jerome Powell hinted that the recent run-up in bond yields was keeping financial conditions restrictive for the time being, but said the Federal Open Market Committee would continue to “proceed carefully” and evaluate economic data as it comes through.
Powell kept the door open to a rate hike in December, but did not seem very eager, said Philip Marey, analyst at Rabobank.
We still expect the bond market to do the Fed’s work, making a December hike redundant, he said.