Written By European Stocks Rise on Hopes for End to US Rate Increases
European stocks rose on Wednesday, May 10, 2023, as investors expressed optimism that the United States Federal Reserve would soon end its series of interest rate hikes. The pan-European STOXX 600 index gained 0.7%, while Germany’s DAX index rose 0.9%, and France’s CAC 40 added 0.8%.
Investors have been watching the Federal Reserve closely in recent months, as the central bank has been gradually raising interest rates to keep inflation in check. However, some analysts have speculated that the Fed may soon pause its rate hikes, given signs that the US economy may be cooling off.
“The recent data on inflation and growth in the US suggest that the Federal Reserve may be close to the end of its tightening cycle,” said David Madden, market analyst at CMC Markets. “That’s good news for European stocks, which have been under pressure from rising borrowing costs.”
Among the biggest gainers in Europe were the banking and financial services sectors. Shares of Deutsche Bank rose 1.5%, while Societe Generale gained 1.8%. The energy sector also performed well, with BP and Royal Dutch Shell both rising more than 1%.
Despite the positive news, some analysts cautioned that investors should remain cautious. “While the prospect of lower interest rates is certainly good news for European stocks, there are still many risks to the global economy,” said Jeroen Blokland, portfolio manager at Robeco. “Investors should be prepared for volatility in the weeks and months ahead.”
Overall, the mood in European markets was optimistic on Wednesday, as investors looked forward to a possible end to the Federal Reserve’s rate hikes. The positive sentiment was reflected in the stock markets, which posted solid gains across the board.
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