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STOXX 600 hits highest since Feb 2022
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European bank shares rally
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German wholesale price index up 2% y/y in March
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Hermes rises after strong Q1 sales
(Updates to market close)
By Shubham Batra and Amruta Khandekar
April 14 (Reuters) - European shares hit their highest
in over a year on Friday and ended their fourth straight week in
the green, buoyed by positive earnings from major U.S. banks and
hopes of an end to the Federal Reserve's rate-hiking cycle.
The pan-European STOXX 600 closed up 0.6% on
Friday, after hitting its highest level since February 2022
earlier in the session. The index gained 1.7% for the week,
clocking its longest weekly winning streak so far in 2023.
The blue-chip STOXX 50 index also advanced 0.6%,
hitting a 22-year peak.
European shares have gained momentum in April with France's
CAC 40 hitting record highs multiple times in a row,
following evidence of cooling U.S. inflation as well as an
improving outlook for the euro zone economy.
"April is one of the strongest months of the year (for
Europe stocks) so you tend to see strong seasonal inflows. Also,
investors have been optimistically pricing in two Fed rate cuts
at the second-half of this year and maybe only one more rate
hike to come," said Giles Coghlan, chief market analyst at HYCM.
On Friday, European banks were the top gainers on
the STOXX 600, jumping 3.0% to hit a one-month high after upbeat
first quarter earnings from big banks in the United States,
which had been keenly awaited following the recent turmoil in
the banking sector.
"So far, we have seen that deposit outflows have been
manageable. But any stress there (in the U.S.) could be
transferred to Europe, then the European banks may have to
diversify their portfolios," said Michael Field, European equity
strategist at Morningstar.
Rate-sensitive real-estate stocks gained 1.8%.
Also lifting sentiment was Singapore's central bank's
decision to keep its key rates unchanged.
European Central Bank policymakers have been backing more
interest rate increases, with ECB President Christine Lagarde
saying underlying price pressures, boosted by rapid nominal wage
growth, are likely to remain high for some time.
Data showed Germany's wholesale prices rose in March at a
slower pace than last month on the year, but rose 0.2%, compared
with February.
Among major stock moves, Hermes rose 1.5% to a new
record high after the luxury firm's first-quarter sales beat
market expectations, helped by strong demand from China.
TomTom jumped 7.3% after the Dutch navigation and
digital mapping company reported surprise first-quarter profit.
Dechra jumped 33.1%, as the British veterinary
pharmaceuticals firm said it had entered into talks with private
equity group EQT for a possible offer in a 4.63 billion pound
($5.80 billion) all-cash deal.
(Reporting by Shubham Batra and Amruta Khandekar in Bengaluru;
Editing by Rashmi Aich and Angus MacSwan)
