Europe close: Shares get boost from EZ confidence data
European shares finished strongly on Monday, rebounding from a mid-afternoon nap to start to the week on a high, despite a dearth of data and with most Asian markets shut due to the Lunar New Year holiday.
The pan-European Stoxx 600 index finished up 0.5% with all major bourses higher. Shares received a late boost as confidence among consumers in the eurozone rose in January for the fourth consecutive month as the economic outlook for the single currency bloc showed further signs of improvement.
Falling energy prices and a slowdown in inflation have lifted sentiment. The European Commission's measure of consumer confidence increased to minus 20.9 in January from minus 22.2 in December, its best level in almost a year.
‘’Investor confidence has surged into the Lunar New Year after China lifted its drastic Covid restrictions and hopes have risen that the end to interest rate hikes may finally be in sight while there have been signs economies may prove more resilient in the downturn,” said Hargreaves Lansdown analyst Susannah Streeter.
“Relief that inflation is finally past its peak is palpable, and there has been rash of data showing central bank policies aimed at dampening down demand appear to be working.”
“Comments by Federal Reserve Governor Christopher Wallace were another salve for markets given that he indicated that falling prices combined with expected smaller rate increases, should do the trick of taming inflation, adding to hopes the end to the hiking cycle is close.”
Waller said he favours a 25 point rate rise next month when central bank gives its next interest rate policy update.
IG analyst Joshua Mahony said S GDP and core personal consumption expenditure figures due out this week "should provide great clarity over where we go from here".
"With the Fed hoping to engineer a soft landing, this week sees traders gauge the possibility of such an event, and whether it will come via a swift end to the current monetary tightening phase.”
Oil prices continued to gain as China's market opened up and people travelled for the holiday season, with Brent crude prices at $88 a barrel.
"The resumption in travel has fuelled an expectation of higher demand as the economy rebounds from its Covid lockdowns, and the G7 looks to implement a price cap on Russian oil. Of course this presumes that Russia won’t be able to sell its oil to China by way of secondary intermediaries which should take the edge off any supply pinch," said CMC Markets analyst Michael Hewson.
In equity news, shares in German flavoring and fragrance producer Symrise fell after the company missed full-year earnings expectations.
Remy Cointreau shares gained after Citigroup upgraded the French liquor company’s stock to “buy” from “neutral” and raised its target price.
Shares in UK food and clothing retailer Marks & Spencer fell after being cut to “hold” by Numis.
Reporting by Frank Prenesti for Sharecast.com