Europe midday: Stocks jump on dovish central bank signals

(Sharecast News) - European stocks were advancing strongly for the fourth straight day on Thursday on optimism that the Federal Reserve may finally be done with its rate hikes. "European markets got off to a solid start to the month, helped by weaker economic data, and a slide in yields which raised the prospect that central banks could well be done when it comes to further rate hikes," said analyst Michael Hewson from CMC Markets.

Meanwhile, hopes of a temporary de-escalation in conflict in Israel rose after US president Joe Biden added to calls for a humanitarian "pause" to allow hostages being held in the Gaza Strip to be released.

The Stoxx 600 index was up 1.58% to 443.42, with gains of nearly 2% for most major indices across Europe. The pan-European index has risen every day this week after hitting a ten-month low last Friday.

In parallel, the yield on the benchmark 10-year German bund was falling nine basis points to 2.678% and euro/dollar was climbing by nearly a full figure to 1.0667.

Wall Street stocks advanced on Wednesday evening after the Federal Open Market Committee (FOMC) chose to keep interest rates on hold for the second straight meeting. In a press conference, chair Jerome Powell indicated that the recent run-up in bond yields was keeping financial conditions restrictive for the time being, but said the FOMC would continue to "proceed carefully" and assess economic data as it comes through.

"Powell kept the door open to a rate hike in December, but did not seem very eager," said Philip Marey, analyst at Rabobank.

"We still expect the bond market to do the Fed's work, making a December hike redundant."

Hopes were rising that all three central banks in the US, Europe and UK will not tighten monetary policy any further. Optimism in Europe in particular increased last week after Eurozone inflation eased more than expected, with the European Central Bank now expected to start cutting rates sooner than anticipated next year.

In company news, oil giant Shell gained 2% after it posted third-quarter adjusted earnings of $6.2bn, as it announced a $3.5bn share buyback over the next three months. Earnings were up from $5.1bn in the previous three months, but down from $9.5bn in the same period a year earlier, and only slightly behind expectations of $6.48bn.

Danish pharma group Novo Nordisk saw shares rise after reporting record sales and profits in its third quarter. Sales in particular were up 28% during the three months to 30 September to 9.6bn Danish crowns.

J Sainsbury boosted its full-year outlook after strong grocery sales throughout the first half. The UK supermarket now expects underlying pre-tax profits to come in between £670m and £700m, at the upper end of its previous guidance for between £640m and £700m.

Germany airline Lufthansa was flying high after beating expectations with tis quarterly earnings due to strong travel demand over the summer and decent bookings ahead of the holiday season.