Positive sentiment in Europe’s equity market prevailed for a second day on Friday, on confidence that central bank stimulus would continue to support the global economy.
The STOXX Europe 600 Index rose 0.6 percent at the close of trading in London and rallied as much as 1 percent. Healthcare, insurer and bank shares climbed the most. The gauge ended the week up 0.1 percent.
NO FED HIKE?
“You may have no rate hike this year from the [US] Federal Reserve and an extension of stimulus in Europe and in Japan, so that’s giving a boost to equities,” said John Plassard, a senior equity sales trader at Mirabaud Securities in Geneva.
“At the same time, crude rebounded, and earnings in the US and Europe were not so bad,” Plassard said.
European equities climbed on Thursday for the first time in four days as quarterly sales at Unilever and Casino Guichard- Perrachon SA beat projections and speculation intensified that the Fed would not raise interest rates this year.
Traders are giving a 56 percent chance that the first increase since 2006 will be in March.
In Europe, final inflation data showed the consumer price index slipped 0.1 percent last month. That is well below the European Central Bank’s target, signaling that more stimulus may be needed.
On Friday, Carrefour SA rallied 6.6 percent after reporting a gain in revenue. Provident Financial PLC climbed 5.4 percent after saying it performed well in the first nine months of the year.
Nestle SA declined 1.9 percent after the world’s largest food company reduced its annual revenue forecast. It reported nine-month sales growth that missed analysts’ projections, hurt by a recall of Maggi noodles and weakness in China.
Remy Cointreau SA dropped 2.4 percent after reporting total organic sales fell.
Hugo Boss AG tumbled 11 percent after cutting its sales and earnings estimates for this year amid deteriorating third-quarter results in China and the US.
ICAP PLC slid 3.6 percent after losing its last buy rating, while Volkswagen AG lost 2.1 percent after a report showed its market share in Europe declined last month.
REBOUND
The STOXX 600 has rebounded after coming within 2 percentage points of a bear market at the end of last month amid growing concern over China’s slowing economy, while Volkswagen’s scandal took its shares to a four-year low.
The developments prompted strategists to cut their estimates for where the STOXX 600 will end the year. They now predict the gauge will finish at 395, down from 422 in July. That is still 8.8 percent above Thursday’s close.
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