GLOBAL MARKETS-European shares rise on U.S. inflation outlook, dollar set for fifth weekly decline

Kitco Media
By Reuters
Published:
Updated:
Reuters



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STOXX 600 up 0.6%, in fifth day of gains

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Euro climbs on diverging rate outlooks

(Updates prices throughout, adds Wall Street futures, banks earnings and Atlanta Fed comments) By Elizabeth Howcroft LONDON, April 14 (Reuters) - European shares rose on Friday, with the STOXX 600 up for a fifth session in a row, while the dollar was set for another weekly loss as investors bet that the U.S. Federal Reserve may soon finish raising interest rates. Asian shares gained after the Monetary Authority of Singapore (MAS) surprised many by leaving policy unchanged, saying the tightening already underway would ensure inflation slowed sharply later this year. The upbeat tone in markets continued during European trading, with the MSCI World Equity Index up 0.2%% on the day at 1150 GMT, near its highest since mid-February . The STOXX 600 was up 0.6% and on track for a 1.7% gain on the week. London's FTSE 100 was up 0.6% and France's CAC 40 was up 0.5%, having hit an all-time high . Wall Street futures were in the red but reduced their losses after Wells Fargo and JP Morgan reported first-quarter profits. The earnings helped assuage fears about stresses in the U.S. banking sector. S&P 500 e-minis were down 0.1% while Nasdaq e-minis were down 0.5% . Investors were betting that the Fed would only raise rates one more time in its rate-hiking campaign, after U.S. producer price data and labour market data on Thursday pointed to inflation cooling. This came after CPI data on Wednesday showed a small rise in U.S. consumer prices in March.


RISK ON


"The risk that the Fed will have to overdo it and cause a hard landing in its fight against inflation has receded," said Holger Schmieding, chief economist at Berenberg. "This underpins ... the general 'risk-on' mood in markets. "Markets are expecting that the rate gap between the Fed and the ECB will narrow further over this summer," Schmieding added, citing expectations of further European Central Bank rate hikes. Atlanta Fed President Raphael Bostic told Reuters that one more quarter-percentage-point interest rate hike could allow the Federal Reserve to end its tightening cycle. The euro benefited from expectations that the ECB will continue to raise rates, after data on Thursday showed euro zone industrial output was stronger than expected in February. The euro was up 0.1% on the day at $1.10535, having earlier hit its highest in around a year, while European government bond yields were set for a weekly rise.


The benchmark 10-year German yield was at 2.37%, on track for a roughly 18 basis-point rise on the week overall - its biggest weekly rise so far in 2023 . The U.S. dollar index was steady at 100.99, on track for its fifth consecutive week of declines , which makes for its longest streak of weekly losses since 2020. Oil prices gained after the International Energy Agency - the West's energy watchdog - said it expected global demand to rise to a record high this year. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets Asia-Pacific valuations U.S. inflation Fed, inflation, rate markets ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Elizabeth Howcroft; Additional reporting by Wayne Cole; Editing by Alexander Smith and David Holmes)

Messaging: wayne.cole.thomsonreuters.com@reuters.net))

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