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STOXX 600 up 0.4%, in fifth day of gains
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Euro climbs on diverging rate outlooks
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U.S. retail sales data, bank earnings a risk ahead
(Updates throughout)
By Elizabeth Howcroft
LONDON, April 14 (Reuters) - European shares rose in
early trading on Friday, with the STOXX 600 up for a fifth
session in a row, as expectations rose 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.
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.
"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," he added, citing
expectations of further European Central Bank rate hikes.
At 0829 GMT, the MSCI World Equity Index was up 0.2% on the
day, near its highest since mid-February .
The STOXX 600 was up 0.4%, in its fifth consecutive
day of gains, and on track for a 1.5% gain on the week.
London's FTSE 100 was up 0.3%. 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 $1.10565, 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 2.379%, on track
for a roughly 20 basis point rise on the week overall - its
biggest weekly rise so far in 2023 .
The U.S. dollar index was a touch lower, at 100.91, on track
for its fifth consecutive week of declines .
Oil prices slipped after the West's energy watchdog warned
that output cuts could exacerbate an oil supply deficit and hurt
consumers, but Brent crude futures and West Texas Intermediate
crude futures were still set for a fourth week of overall gains.
Investors are now bracing for earnings from Citigroup Inc , Wells Fargo and JPMorgan Chase & Co which
could test the bullish mood given recent stress in the sector.
"We will be looking at bank earnings calls to follow
discussions around deposits, lending standards, and any
adjustments to bank funding that might be planned, including
more debt sales," analysts at NatWest Markets said.
Investors are also waiting for U.S. retail sales data, due
later on Friday.
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(Reporting by Elizabeth Howcroft, additional reporting by Wayne
Cole; Editing by Lincoln Feast and Alexander Smith)
