Europe close: Stocks rally alongside single currency
By Alexander Bueso
Date: Tuesday 04 Oct 2022
(Sharecast News) - European shares surged in midday trade as investors responded to the Wall Street rally and hopes the US Federal Reserve would scale back the pace and size of interest rate rises earlier than planned.
The pan-European Stoxx 600 was up 3.12% at 403.03, with all major bourses higher alongside.
Britain's FTSE 100 was up 2.57% at 7,086.46, while the pound was 1.17% firmer versus the dollar at 1.1456 - its highest level in two weeks as investors welcomed news that the Chancellor had abandoned plans to cut the top rate of tax.
"We appear to be entering a period where bad news could be good news, with the Bank of England having already highlighted the fact that central banks will essentially reintroduce QE as soon as the going gets tough," said Josh Mahony, senior market analyst at IG.
"With the RBNZ due to follow on from a somewhat measly 25bp RBA rate hike overnight, there is a feeling that economic weakness and elevated rates could soon see central banks take a less hawkish tone."
Nonetheless, in the case of sterling, technical resistance at 1.15 had yet to fall and there continued to be a fair bit of market commentary regarding negative views on the outlook for the currency.
Euro/dollar was also on the up, climbing 1.51% to 0.9974 following the release of data showing the biggest drop in US job vacancies in August since April 2020.
In other economic news, producer prices jumped in the eurozone in August, official data showed on Tuesday, as energy costs mounted.
According to Eurostat, the European Union's statistical office, industrial producer prices rose 5.0% in August compared with July, and by 4.9% across the wider bloc. In July, prices jumped 4.0% in the eurozone and 3.7% in the EU.
Annually, prices surged 43.3% compared to August 2021 and by 43.0% in the EU. Analysts had been expecting a monthly rise of 4.9% and annual increase of 43.1% in the eurozone.
In equity news, shares in UK bakery chain Greggs gained 10% after reporting a rise in quarterly sales despite the deepening cost of living crisis and plummeting consumer confidence.
Hargreaves Lansdown jumped 7% tafter an upgrade to 'hold' at Jefferies.
British insurer and pensions group Legal & General gained after saying it had not been exposed to recent bond market turmoil sparked by UK Finance Minister Kwasi Kwarteng's badly received mini budget last week.
Accelleron shares were higher as investors bought the stock at a discount after the former ABB turbocharging unit's weak market debut on Monday.
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