(Bloomberg) -- European stocks climbed Friday to notch their best week in two months as slowing US inflation and the growing probability that the Federal Reserve will cut interest rates in September lifted investor sentiment.
The Stoxx Europe 600 Index ended the session with a 0.9% gain, closing at its highest level since early June and mirroring a rally across the Atlantic as hopes for a possible rate cut in the US boosted risk assets. Almost every sector rose, with consumer stocks, technology firms and retailers leading gains.
Novo Nordisk A/S, ASML Holding NV, Siemens AG and LVMH provided the biggest single boost to the index. The luxury sector, which has seen profit estimates fall faster than for the broader European market, rebounded on Friday even as results from Brunello Cucinelli SpA initially failed to impress.
European equities are fighting back after elections in France and the UK raised uncertainty, curbing 2024’s rally. France’s political turmoil in particular has been a drag recently on European equities: The Stoxx 600 is up 9.4% this year, about half the gain in the S&P 500. France’s CAC 40 Index has shed most of its 2024 advance, up just 2.4% year-to-date.
“What’s happening in France is important of course but these good US indicators are going our way as they will help bring yields down and absorb some of the stress,” said Arnaud Girod, head of economics and cross-asset strategy at Kepler Cheuvreux in Paris.
“It can also encourage the European Central Bank to do more,” in terms of monetary easing, Girod added.
Some early updates also helped fuel the optimism. Ericsson AB’s second-quarter results lifted the telecommunications sector. The Swedish company’s shares jumped as much as 8.2% after it beat analyst expectations, helped by cost-cutting measures. AddTech AB was the top gainer, hitting a record after results from the industrial technology group surpassed estimates.
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- M&A Watch Europe: Axel Springer, Brookfield, Neoen, Viterra
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- US Stock Futures Unchanged; 3D Systems Gains
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--With assistance from Kit Rees, Michael Msika and Mark Tannenbaum.
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