European shares rise as investors expect eurozone rate hikes

European shares rose on Monday as investors welcomed economic data indicating that the central bank’s aggressive interest rate hike policy may soon peak.

Europe’s region-wide Stoxx 600 rose 0.4 percent, extending its rally from last week, boosted by gains for real estate companies.

US stock futures also indicated that the markets will open higher in New York. Contracts tracking Wall Street’s benchmark S&P 500 rose 0.4 percent and those tracking the tech-heavy Nasdaq added 0.3 percent.

Shares of Swedish real estate company SBB jumped 3.9 per cent after the group said on Friday it raised $276 million through the sale of construction company JM.

SBB’s value fell last week after S&P Global downgraded the company to junk status following concerns about the risk of rising interest rates.

France’s CAC 40 rose 0.4 percent and Germany’s DAX rose 0.2 percent after the European Union’s statistics agency Eurostat reported that eurozone industrial production fell 1.4 percent year-on-year in March, having grown 2 percent the previous month. I went.

In particular, the decline in capital goods production “certainly suggests that additional tightening in credit standards could impact activity at the end of the first quarter,” said Klaus Wiestesen, chief eurozone economist at Pantheon Macroeconomics.

The reading in a Reuters poll of economists was well below forecasts for 0.9 percent growth, suggesting the ECB’s tightening campaign was cooling the region’s economy faster than expected.

Meanwhile, Germany said its wholesale price index has registered a year-on-year decline for the first time since December 2020.

Traders also prepared for the release of US retail sales data for April on Tuesday, which could provide insight into consumer sentiment as inflation cools. Analysts forecast that after two months of declines, the Census Bureau would post a 0.7 percent increase in total retail sales compared to the previous month.

However, many investors were looking to a breakthrough between the White House and Republicans in Congress over talks to avoid an unprecedented national default.

Brad Bernstein, managing director of UBS Wealth Management in the US, said, “The stock market remains bullish until we reach a resolution to the debt ceiling and until we see more clarity from the regional banking sector, which is currently There are two factors weighing on the shares.” ,

The yield on the interest rate-sensitive two-year Treasury bond was up 0.013 percentage points to 4.01 percent, while the yield on the 10-year bond was up 0.02 percentage points to 3.48 percent. Bond yields rise when prices fall.

The dollar fell 0.2 percent against a basket of six other currencies, despite last week’s data showing that US consumer expectations for long-term inflation had risen to a 12-year high.

Asian shares also rose, with China’s CSI rising 1.6 percent and Hong Kong’s Hang Seng index rising 1.8 percent. China’s renminbi fell to a two-month low against the dollar on Monday.