Connect with us

Investing

Retailers lift European stocks but growth worries persist

Retailers lift European stocks but growth worries persist 1

By Susan Mathew

(Reuters) -European markets rose on Thursday with the retail sector leading the charge as Britain revealed new stimulus plans, while the U.S. Federal Reserve sticking to its monetary policy tightening script also bolstered risk appetite.

The pan-European STOXX 600 index closed higher for a second straight session, up 0.8%. Gains were largely broad-based, with retailers up 4.7%.

British retailers Ocado, Marks & Spencer, Next and Primark owner Associated British Foods rallied between 4.4% and 11.5% on hopes that a new 15 billion pound ($19 billion) package of support for households struggling to meet soaring energy bills will encourage them to keep spending.

Luxury stocks also ticked up, with Louis Vuitton owner LVMH up 3.7% – the biggest boost to the STOXX 600.

Sentiment remained fragile, however, on lingering worries about slowing economic growth from central bank tightening.

On Wednesday, minutes of the Fed’s early May policy meeting showed policymakers agreed to raise interest rates by 50 basis points at the next two meetings to tame surging prices and also discussed the possibility of pausing after July should inflation start to ease.

Regionally, the European Central Bank is expected to begin a hiking cycle in July.

“While (Fed) minutes didn’t really add much to the outlook for monetary policy, they did at least calm fears that a faster pace of tightening is on the way,” said Chris Beauchamp, chief market analyst at online trading platform IG.

“Beyond bargain hunting there seems little concrete rationale for the bounce, which leaves investors wondering whether next week will see yet another dramatic reversal in stocks.”

Markets have had a volatile week, and the STOXX is set to end yet another month lower as investors worry about the effect of central bank tightening, the Russia-Ukraine war and China’s COVID-19 curbs on economic growth.

Fund managers expect the STOXX 600 to reach 450 points by year-end – just about 3.5% higher from current levels, according to a Reuters poll.

European utilities fell 1.2% on Thursday, limiting gains. Water company United Utilities slumped 6.6% after warning of higher costs in the current year. Other British utilities also slipped on worries over an energy windfall tax being extended to the sector.

BT Group slid 2.3% after Britain launched a national security review of a deal by the telecoms group’s biggest shareholder Patrick Drahi to increase his stake to 18%.

Some markets in Europe, including Switzerland, Sweden and Finland, were closed for a local holiday.

(Reporting by Susan Mathew in Bengaluru; Editing by Subhranshu Sahu and Sriraj Kalluvila, Kirsten Donovan)

Editorial & Advertiser disclosure
Our website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.
Global Banking and Finance Review Awards Nominations 2022
2022 Awards now open. Click Here to Nominate

Advertisement

Newsletters with Secrets & Analysis. Subscribe Now