European Shares Soar by 3% in Week, Fueling Optimism for Global Rate Hike Respite

“European Shares Remain Steady as Hopes of US Rate Hike Pause Drive Biggest Weekly Surge in Three Months”
European Shares Soar by 3% in Week, Fueling Optimism for Global Rate Hike Respite

European shares experienced a lackluster trading day on Friday, but managed to record their largest weekly percentage increase in over three months. Investors were hopeful that easing inflation would prompt the US Federal Reserve to pause its rate hikes in the near future. The pan-European Stoxx-600 index saw a gain of over 3% this week, marking its best week since March and recovering from last week’s losses.

In Ireland, AIB and Bank of Ireland shares rose by as much as 1% in the latest session, while Permanent TSB climbed over 3%. Ryanair shares, on the other hand, remained relatively unchanged throughout the week, following a substantial climb of 36% since the beginning of the year.

Meanwhile, in Britain, bookmaker 888 ended its discussions with FS Gaming regarding board changes. The company stated that any actions taken by shareholders to alter corporate control would likely put its UK license at “significant risk”. Following this news, shares in 888 plummeted by 23%.

The US dollar experienced a decline this week after reports on consumer and producer prices suggested that the economy may have entered a disinflation phase. This sparked speculation that the Federal Reserve could halt its tightening measures soon after implementing a 25 basis points rate hike in July. As a result, eurozone government bond yields also fell as traders began to scale back their expectations of rate hikes from the European Central Bank (ECB).

Giles Coghlan, the chief market analyst at HYCM, noted that there was a sense of relief globally if US inflation remained under control, which would boost market sentiment. However, Coghlan also highlighted the challenges faced by the Bank of England in combating inflation, compared to the Federal Reserve. The ECB, he noted, falls somewhere in between the two. Short-term interest rate markets for the ECB are currently anticipating one or possibly two more interest rate hikes this year.

In conclusion, European shares had a relatively muted trading day on Friday but achieved their largest weekly percentage gain in over three months. The hope of easing inflation leading to a pause in rate hikes by the US Federal Reserve drove this positive sentiment. Irish banks and Ryanair shares performed well, while 888 faced a significant drop in its share price. The US dollar also experienced a decline as reports on inflation sparked speculation about the Federal Reserve’s future actions. Eurozone government bond yields followed suit, falling as traders adjusted their expectations for ECB rate hikes.