The European benchmark STOXX 600 recorded its biggest weekly rise since March on Fridaysupported by interest rate-sensitive real estate securities, as signs of the end of monetary policy tightening by major central banks boosted sentiment.
The pan-European index gained 0.2%, also boosted by encouraging earnings, signs of slowing inflation and falling euro zone sovereign bond yields, as bets on rate cuts in 2024 increase. The index added 3.4% for the week.
The decisions of the Federal Reserve, the Bank of England and the European Central Bank, Among others, keeping monetary policy unchanged have underpinned investors’ hopes that interest rates have peaked.
“There is cautious optimism about the end of rate hikes, but it is premature because we have to see how the data presents itself”said Giles Coghlan, chief analyst at GCFX Ltd. “It all depends on the trajectory of inflation and the evolution of performance.”
Isabel Schnabel, of the ECB board, noted that the central bank is on track to reduce inflation to 2% in 2025, but that the “last leg” of disinflation may be the most difficultso the bank still cannot close the door to new rate increases.
Real estate values posted their biggest weekly rise since at least 2008, adding 12.2%, as the rally in public debt drives down yields in Europe and around the world.
Automotive stocks rose 1.7%, representing a weekly increase of 6.2%. BMW advanced 2% on higher margins in its automotive business in the third quarter, and Volvo Cars climbed 3.7% following its October sales update.
Source: Ambito
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