(Bloomberg) -- European stocks posted their longest weekly winning streak since March, as Federal Reserve Chair Jerome Powell said the time had come for the central bank to cut its key policy rate.
The Stoxx 600 Index rose 0.5% by the close, bringing its weekly advance to 1.3% — its third gain in a row. Retail and real estate stocks outperformed Friday, while technology lagged.
Powell’s speech at the Jackson Hole economic symposium affirmed expectations that officials will begin lowering borrowing costs next month and made clear his intention to prevent further cooling in the labor market.
Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, said the comments sent an “unequivocal” signal about the central bank’s policy intentions.
“According to our assessment, the labor market is indeed slowing but not falling off a cliff, which means a 25-basis-point cut in September, followed by another cut in December, remains our base case,” Ahmed said.
Europe’s benchmark index has rebounded after a rough start to August, as resilient economic data eased worries about a US recession. Traders have priced in nearly 100 basis points worth of cuts in interest rates through December, according to swaps data.
“The way we articulate it is that we want clients to remain engaged,” said Frederique Carrier, head of investment strategy at RBC Wealth Management. “So we are market-weight in European equities, but the focus on high quality companies is very important.”
Nestle SA shares erased the day’s declines, which were sparked by an announcement that Laurent Freixe will replace Mark Schneider as chief executive officer. Analysts questioned whether the unexpected management change will lead to Nestle walking away from its current financial guidance. Meanwhile, Dino Polska SA dropped after a weaker-than-expected earnings report.
For more on equity markets:
- Health Care Stocks Provide Both Growth and Shelter: Taking Stock
- M&A Watch Europe: Getinge, Infas, Ipsos, Sanofi, Evoke
- London Cross-Border Listings Open a Gateway to M&A: ECM Watch
- US Stock Futures Rise; Workday, Cava Group, Ibotta Gain
- Work Cut Out: The London Rush
You want more news on this market? Click here for a curated First Word channel of actionable news from Bloomberg and select sources. It can be customized to your preferences by clicking into Actions on the toolbar or hitting the HELP key for assistance. To subscribe to a daily list of European analyst rating changes, click here.
©2024 Bloomberg L.P.
