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Fed signals buoy European shares, AB InBev jumps

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(Reuters) - Shares in Europe rose across the board on Friday as comments from a Federal Reserve official cemented the case for a U.S. interest rate cut this month, with brewer Anheuser-Busch InBev leading blue chip gains after moves to reduce its debt burden.

New York Fed President John Williams said on Thursday policymakers could not wait for economic disaster to hit before adding stimulus, reviving expectations of a deeper rate cut in July and sparking a rally in shares worldwide

Markets have fully priced in a 25 basis point cut by the Fed this month, but a batch of strong U.S. data recently had dimmed hopes of an aggressive cut and weakened the positive global mood that has driven stock markets higher since May.

The pan-European stocks benchmark , which hit a 3-week low on Thursday, rose 0.7% by 0819 GMT.

“The question is not that will a rate cut happen, but will the size of the cut itself will be 0.50 bps instead of 0.25 bps, because there is uncertainty over the size of what the interest rate cut will be at the upcoming Fed meeting,” Spreadex analyst Connor Campbell said.

“Markets haven’t had a great week so any sign of extra dovishness will be taken as a positive.”

Poor earnings over the last two sessions had threatened to take the index lower on the week, but if Friday’s gains hold, the STOXX will end the week higher for the sixth time in seven weeks.

Much of the rally, from what were the sharpest monthly declines in more than two years in May, has been spurred by signals from major central banks that they would take a more accommodative stance to offset the impact of a prolonged and bruising trade war between the United States and China.

Belgium-based Budweiser owner Anheuser-Busch InBev (ABI.BR) jumped 5.2% after the debt-heavy brewer said it had agreed to sell its Australian operations to Japan’s Asahi (2502.T) and was still interested in reviving the stalled flotation of its Asian business.

The oil and gas sector .SXEP rose 0.8% as crude prices gained on the back of the latest signs of tension between the United and States and Iran.

Trade sensitive stocks also got a lift after U.S. Treasury Secretary Steven Mnuchin suggested in-person talks between U.S. and Chinese officials could follow after telephone conversations on Thursday.

Auto stocks .SXAP surged more than 1% with BMW (BMWG.DE) shares up 1.3% after it named insider Oliver Zipse as the new chief executive. That reflected hopes the “decisive” company lifer would help BMW regain its edge in electric cars and win back the premium market lead lost to Mercedes-Benz.

Media shares .SXMP were the only decliners among major sectors, down 0.2% on Publicis’ (PUBP.PA) 6.8% slide after the advertising group cut its 2019 revenue growth guidance.

Reporting by Susan Mathew in Bengaluru; editing by Patrick Graham

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