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PARIS / LONDON (dpa-AFX) – In the wake of the rising Wall Street, the most important European stock markets also rose on Tuesday. The prospect of interest rate hikes by the US Federal Reserve possibly being steeper than previously expected did not cause uncertainty on either side of the Atlantic, but drove financial stocks.
The EuroStoxx 50 (EURO STOXX 50), the leading index for the euro zone, had reached its highest level since the end of February and ended up gaining 1.14 percent to 3926.12 points. The French CAC 40 was also strong with a plus of 1.17 percent to 6659.41 points.
The British FTSE 100 was only up 0.46 percent to 7476.72 points. However, the commodities-heavy “Footsie” certainly bucked the otherwise gloomy stock market sentiment across Europe with a moderate gain on Monday. Oil and mine stocks were hardly in demand on Tuesday. They had recently suffered from concerns about shortages of important raw materials for industry in the course of the Ukraine war.
Instead, US monetary policy came back into focus. In view of the “much too high” rate of inflation, Federal Reserve Chairman Jerome Powell had brought up the possibility of faster interest rate hikes. The Fed could also hike interest rates by more than 0.25 percentage points at upcoming meetings of the Federal Reserve Board if necessary.
“Confidence in the Fed continues to prevail among equity investors. Everyone here assumes that the Fed will only hike so much that it does not harm the economy,” commented fund manager Thomas Altmann from asset manager QC Partners.
Powell’s statements caused bank stocks in particular to skyrocket across Europe. These usually benefit from rising interest rates with higher yields.
When asked what could stop the Fed from raising interest rates by 0.5 percentage points at the next meeting on May 4th, Powell replied “Nothing!”. For the currency expert Ulrich Leuchtmann from the Commerzbank a clear “hint with the fencepost”. The sector index of European banks gained two and a half percent at the top of the sector table.
The insurance industry recorded an increase of 2.0 percent. Among the individual values, the shares of Zurich (Zurich Insurance) went up by 1.8 percent. Analyst Iain Pearce from Bank Credit Suisse had increased his estimates for the group to take into account positive margin and sales developments, especially in property and casualty business.
The defensive pharmaceutical sector (STOXX EU600 Health Care), on the other hand, was hardly in demand. Novartis attracted attention here with a report that the group was suspending numerous activities in Russia. Irrespective of this, the private bank Berenberg maintained its positive assessment of the Novartis shares. The Swiss are growing in the mid-single digits and will probably be able to increase their margin into 2026, wrote analyst Luisa Hector. Investors’ expectations of new products from the pipeline are meanwhile very low. Novartis shares fell half a percent.
Among the other individual stocks, Kingfisher’s shares fell by more than six percent at the “Footsie” end. The outlook for the hardware store chain had raised the fear among some analysts that customers could now scale back their home improvement activities after the corona lockdown./la/jha/