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European stocks rise on the hope of Fed pause; eyes are on ECB meeting By Stocksak


© Stocksak. After Porsche’s IPO, the German share price graph DAX was pictured. It was taken at Frankfurt Stock Exchange, Germany, October 21, 2022. REUTERS/Staff

Devik Jain, Sruthi Sankar

(Stocksak). European shares rose Monday on the hope that the Federal Reserve would slow down its pace of interest rates hikes. Investors welcomed Rishi Sunak’s victory in Britain’s prime ministerial race, and looked forward to a key rate decision by the European Central Bank.

The continent-wide index closed 1.4% higher at its highest level in almost a week. The gains were led by utilities, media, travel and leisure, and media.

Wall Street’s main indexes rose on Friday, following a report that suggested the Fed would likely consider a smaller rate rise in December. [.N]

While it is encouraging that Fed officials are beginning to point out an end in sight to rate increases, such a suspension will remain conditional upon a fading labor market and a diminishing inflation. This is not yet evident in the data,” stated Mark Haefele chief investment officer at UBS Global Wealth Management.

“We believe the full effects of restrictive monetary policy for the economy and corporate profits are not yet well reflected in consensus forecasts – leading to potential disappointments ahead.”

Sunak’s win in the race to lead Conservative Party was a boost to sentiment. Analysts said that it had eased some of the anxiety about the future outlook for the UK economy. The blue-chip in Britain rose 0.6% while gilts increased. ()

“Time will reveal how this plays in the medium- to longer term, however, in the short term the rapid decision to remove Sunak from the market is one that the market seems happy with. Art Hogan from B. Riley Wealth in New York said, “At least we’ve checked this box and can now move on to the other things to worry about.”

A survey found that the euro zone’s business activity declined at its fastest pace for nearly two years in October. This was due to the cost of living crisis, which made consumers more cautious and reduced demand.

This week’s focus will be on European Central Bank’s policy meeting. It is likely that it will raise interest rates by another 75bps as it attempts to limit inflation at five times its target. A Stocksak poll revealed this.

The Dutch technology investor Prosus fell 17.3% among individual stocks. This was in response to weakness in Hong Kong tech giants.

Prudential Plc, Asia-focused insurance, lost 9.3%, while Standard Chartered (OTC), and HSBC (OTC), dropped about 0.6% & 1%, respectively.

Philips dropped 1.5% after the Dutch manufacturer of medical equipment said it expected 4,000 job losses and warned that supply chain issues would continue to impact sales in the last months 2022.

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