European stocks continued to rise today, Friday, after a sharp jump in the last session following the European Central Bank’s indication that it would end the cycle of raising interest rates.
The European STOXX 600 index rose 0.9%, supported by gains in shares of luxury goods companies affected by China, after better-than-expected economic data from the second largest economy in the world.
French Caring and LVMH shares rose 2.7% each.
The European STOXX 600 index achieved its largest percentage gain in six months, Thursday, after the European Central Bank raised interest rates by 25 basis points, which is the tenth and likely final increase in the 14-month battle to curb inflation.
The British Financial Times 100 Index led the weekly gains in the region and rose 0.8%.
H&M shares fell by 4.6% after the Swedish clothing company announced that it had not recorded an increase in sales in the last quarter, contrary to expectations, as it finds it difficult to attract customers as the cost of living crisis continues.
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European Central Bank Deputy Governor Luis de Guindos stressed that maintaining interest rates at 4% for an extended period may be sufficient to curb inflation.
“We believe that the recent increase in interest rates, maintained for some time, may be sufficient to reduce inflation to the 2% target,” Guindos told the Spanish radio network “COP”.
He added in his statements, reported by Bloomberg News, that the level of inflation in the single European currency area will continue to decline in the coming months.
Yesterday, Thursday, the European Central Bank raised key interest rates by a quarter of a percentage point, for the tenth time in a row since July 2022.
The European Central Bank’s Governing Council in Frankfurt said that the main refinancing rate was raised to 4.5%, and the deposit interest rate to 4%.
Imposing higher interest rates would increase the cost of loans, thus slowing demand and affecting the high rate of inflation, but since the high cost of loans represents a burden on the economy, there have recently been calls to stop raising interest rates.
The European Central Bank said that persistently high inflation in the euro zone will decline at a slower pace than expected three months ago.
2023-09-15 08:50:11
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