PARIS/LONDON (dpa-AFX) – Europe’s stock exchanges rose significantly on Tuesday. They were reacting to cautious statements from US monetary authorities, which dampened interest rate concerns on the markets and depressed bond yields. The EuroStoxx 50 (EURO STOXX 50) climbed by 1.62 percent to 4179.23 points at midday.
Meanwhile, the French CAC 40 gained 1.48 percent to 7,124.99 points, while the British FTSE 100 (“Footsie”) rose 1.47 percent to 7,602.68 points.
Once again this proved to be the case monetary policy for the stock markets as more important than politics. “Reassuring words from leading US central bankers on interest rate policy have initially suppressed investors’ concerns about an escalation spiral in the Middle East,” noted capital market strategist Jürgen Molnar from broker RoboMarkets. “The probability of a continuation of the interest rate pause in November is increasing and is creating monetary policy optimism in the market.”
However, it is not a foregone conclusion whether the current profits will become more. In addition to monetary policy, the upcoming reporting season is likely to set the pace for prices. “I believe that companies will give rather conservative business outlooks and therefore expect that analysts will reduce their forecasts for profit growth in 2024 from currently more than seven percent in the coming weeks,” noted investment strategist Ulrich Stephan from Postbank. However, this is contradicted by the favorable valuation of the European stock markets.
Meanwhile, trouble threatens from Italy. Stephan pointed out the growing difference in yields between German and Italian government bonds. “For 2024, Italy will probably have to raise more money on the financial markets than previously expected,” predicted the investment strategist. “Rising interest rates coupled with high deficits create a dangerous cocktail.”
The individual sectors in Europe developed in a mirror image to the previous day. The oil stocks that were in demand at the beginning of the week were now at the bottom of the table after oil prices did not extend their significant gains from Monday following the Hamas attack on Israel. Shares in travel and leisure stocks, which had suffered from developments the day before, rose.
Interest-rate and economic-sensitive values were also in demand. Real Estate Stocks rose significantly and were thus unimpressed by the situation at the heavily indebted Chinese real estate developer Country Garden, which had again failed to make outstanding payments. The heavyweight Vonovia (Vanovia SE (ex Deutsche Annington)) rose by 2.9 percent. The shares of luxury goods manufacturers, which came under pressure last week, were also in demand. Richemont rose 3.2 percent, Kering rose 2.7 percent./mf/men