European shares gain on rate-cut cheer, Airbus rises
Send a link to a friend
[January 12, 2024] By
Khushi Singh and Shristi Achar A
(Reuters) -European shares climbed on Friday as investors overlooked an
escalation in the conflict in the Middle East and cheered interest rate
cut prospects from the European Central Bank (ECB), while shares of
Airbus rose on record annual jet orders.
The pan-European STOXX 600 was up 0.9% by 0934 GMT, after a 0.8% drop in
the previous session. The index is also on track to eke out marginal
weekly gains.
ECB President Christine Lagarde said on Thursday the "hardest and worst
bit" regarding inflation was likely over and that interest rates would
be cut if inflation falls to the 2% level.
Rate-sensitive real estate stocks rose 1.8%, leading sectoral gains,
while technology index was up 1.2%.
Investors have priced in at least five rate cuts in 2024, with traders
seeing about a 30% chance of the first move coming in March. [0#ECBWATCH]
"There are expectations that inflation is heading in the right
direction," said Susannah Streeter, senior investment and markets
analyst at Hargreaves Lansdown.
"And Christine Lagarde's emphasis that we're over the hardest and worst
in terms of inflation and the fact that we (have) really passed peak
rates certainly has been encouraging."
Oil and gas shares added 1.3%, on a more than 2% rise in crude prices,
following strikes carried out by the United States and Britain against
Houthi military targets in Yemen, adding to fears of further escalation
in the Middle East conflict. [O/R]
[to top of second column] |
The German share price index DAX graph is pictured at the stock
exchange in Frankfurt, Germany, January 9, 2024. REUTERS/Staff/File
photo
"If there is this headache of potentially higher goods prices, that
could start to raise inflationary concerns a bit. It very much
depends on how long the situation continues for," Streeter added,
referring to the escalations.
Meanwhile, French consumer price inflation (CPI) rose 4.1%
year-on-year in December, largely due to higher energy and services
prices, while Spain's annual inflation fell to 3.1% last month.
Among stocks, Airbus rose 2.5% after the planemaker reported record
annual jet orders and confirmed an 11% rise in 2023 deliveries. The
aerospace and defence index climbed 2.2%, hitting a record high.
Burberry shares declined 7.6% to the bottom of the STOXX 600 after
the luxury retailer downgraded its guidance, citing a slowdown in
luxury demand.
Other European luxury stocks also sagged, with LVMH down 1.0% and
Christian Dior off 0.8%.
Shares in Adyen were up 3.7%, after Goldman Sachs raised their
target price on the payment solutions firm. It was the best
performer on the Dutch blue-chip AEX index, which gained 1.2%.
(Reporting by Khushi Singh and Shristi Achar A; Editing by Mrigank
Dhaniwala)
[© 2024 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |