Optimism in the markets pushes European stocks to record weekly gains

2023-06-02 16:41:34

European stock indices ended the week’s trading higher, with easing fears of a US default and indications that the US Federal Reserve may halt its rate hike cycle later this month.

On Thursday, the US Senate approved a bipartisan bill, backed by President Joe Biden, to raise the government’s debt ceiling of $31.4 trillion, avoiding what could have been its first-ever default.

On the monetary policy front, European Central Bank President Christine Lagarde said that the current inflation rate of 6.1 percent is still too high and that continued monetary tightening is required until it is clear that inflation will fall to its 2 percent target.

In turn, a member of the European Central Bank’s Governing Council, Fabio Panetta, expected more hikes in interest rates, but he believes that the end of the monetary tightening cycle is imminent.

On the other hand, data from the Ministry of Labor showed that the unemployment rate in America rose to 3.7 percent, at its highest level in 6 months, while analysts had expected it to remain at the same level in April of 3.4 percent in April.

As for average hourly earnings, it rose on a monthly basis by 0.3 percent in May, while expectations were that it would rise at the same rate as April of 0.4 percent in April.

After the jobs data, the market’s expectations about the future of interest rates changed on the CME FedWatch index. Before the release of the data, expectations were 75 percent that the Fed would prove the interest rate, but after its release, this percentage fell to 64.3 percent.

price movements

The European Stoxx 600 index rose 1.5 percent to 462.2 points, achieving a weekly gain of about 0.2 percent.

The German DAX also rose 1.3 percent to 16,051 points, recording a weekly gain of 1.27 percent.

Shares of German sportswear companies Puma and Adidas rose after their US competitor Lululemon raised earnings forecasts for workers, rising by 6.4 percent and 5.8 percent, respectively.

The Swedish “SBB” company jumped 53.3 percent, after the founder of the real estate company stepped down as CEO, and Bloomberg reports that investors are interested in its business.

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