2023-12-19 17:06:04
Archyde.com – European stocks rose on Tuesday as government bond yields fell after comments from European Central Bank officials and data confirmed a slowdown in inflation in the euro zone.
The European STOXX 600 index closed up 0.4%, coinciding with the rise of the Standard & Poor’s 500 index in New York near its highest levels ever, with investors expecting that major central banks, including the Federal Reserve and the European Central Bank, will begin reducing interest rates next year.
The index of travel and entertainment companies rose 1.8%, topping sector gains in Europe, followed by the mining and financial services sector indexes.
The data confirmed that inflation in the euro zone slowed sharply to 2.4% in November on an annual basis, although many economists expect price pressures to rise again in the coming months.
“With inflation now near the 2 percent target, the ECB’s focus will now almost certainly shift to keeping the eurozone economy alive, an economy that has been teetering on the brink of recession in 2023,” said Michael Field, European market strategist at Morningstar.
Francois Villeroy de Gallo, a member of the European Central Bank’s Governing Council, said that interest rates are expected to be cut sometime in 2024, reiterating the need for inflation to fall to 2% by 2025 at the latest.
Driven by optimism about lower interest rates, the STOXX 600 index is heading for a second month of gains in December with a 12.4% rise for the year.
UBS shares rose 3.4% after investment company Cevian Capital announced a 1.3% stake in the bank.
Covestro shares increased 1.4% after a report stated that Abu Dhabi National Oil Company (ADNOC) is preparing to raise its offer to buy the German chemical manufacturer.
However, Super Dry shares in Britain fell 17.5% to a record level after the clothing retailer warned of a decline in annual profits.
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