Il Nuovo Postiglione - Europe stocks boosted by ECB rate cut signal; earnings in focus

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Europe stocks boosted by ECB rate cut signal; earnings in focus

ECONOMY 12.04.2024

Europe stocks boosted by ECB rate cut signal; earnings in focus / Photo: Daniel ROLAND - AFP

Europe's stock markets rose Friday after the European Central Bank signalled a likely June interest rate cut, with London boosted by fresh hope that Britain has escaped from recession, as dealers also awaited the start of the US earnings season.

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Gold hammered a record pinnacle at $2,400.67 per ounce as dealers flocked to the haven investment to shelter from intensifying Middle East tensions, which also propelled crude oil more than one percent higher.

The dollar climbed versus the euro as dealers digested increasing indications of a June rate reduction from the Frankfurt-based ECB.

Yet fading hopes for a similar June rate cut from the US Federal Reserve roiled Asian equities, which struggled to build on Wall Street's positive lead.

"Stock markets edged higher in Europe on Friday despite uneven performances across Asia overnight and rising global uncertainty," said ActivTrades analyst Pierre Veyret.

"Despite a few volatility spikes, EU stock investors reacted positively to ECB President Christine Lagarde's speech. The central banker reassured everyone, saying the ECB would stick to its rate-cut plan regardless of the recent hot inflation report in the US."

London stocks fizzed higher on data showing the UK economy grew for a second straight month in February, further fuelling recovery hopes after sliding into a shallow recession in the second half of last year.

- 'Welcome distraction' -

Attention is now turning to the corporate reporting season, which gets underway in earnest later in the day with banking giants JPMorgan and Citibank among those to log earnings.

Analysts said that while reducing interest rates would be a major boost for equities, investor optimism about company profits was crucial.

"The inception of the US first quarter earnings season brings a welcome distraction from the Fed's struggles in bringing inflation back down to target," said Scope Markets analyst Joshua Mahony.

Tech titans helped drive gains in the Nasdaq and S&P 500 after producer price index data broadly met expectations, tempering worries about inflation following Wednesday's figures showing a third successive upside miss in consumer price inflation.

The CPI figures followed a series of indicators suggesting the world's number one economy remained resilient and the jobs market strong despite interest rates sitting at two-decade highs and inflation still well above the Fed's target.

That has seen investors trim their US rate cut bets from six at the start of the year to two now.

Dimming hopes for rate cuts continued to support the dollar, which surged to another 34-year high above 153 yen, putting Japanese officials in the spotlight after they said they were ready to intervene in markets to support their currency.

- Key figures around 1040 GMT -

London - FTSE 100: UP 1.2 percent at 8,022.12 points

Paris - CAC 40: UP 0.8 percent at 8,086.88

Frankfurt - DAX: UP 0.8 percent at 18,101.37

EURO STOXX 50: UP 0.7 percent at 5,002.27

Tokyo - Nikkei 225: UP 0.2 percent at 39,523.55 (close)

Hong Kong - Hang Seng Index: DOWN 2.2 percent at 16,721.69 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,019.47 (close)

New York - Dow: FLAT at 38,459.08 (close)

Dollar/yen: UP at 153.33 yen from 153.27 yen on Thursday

Euro/dollar: DOWN at $1.0660 from $1.0726

Pound/dollar: DOWN at $1.2491 from $1.2553

Euro/pound: DOWN at 85.33 pence from 85.44 pence

Brent North Sea Crude: UP 1.1 percent at $90.74 per barrel

West Texas Intermediate: UP 1.3 percent at $86.12 per barrel

burs-rfj/rl

S.Urgo--INP

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