European shares rally sharply ahead of producer price data

European stocks rose sharply on Tuesday in a broad-based rally led by chipmakers, travel and leisure companies and some strong corporate updates, with investors eyeing producer price data due later in the day.

The regional STOXX 600 index was up 2% by 0827 GMT, hitting its highest level since September 23. Stocks in the region staged a solid overnight rally on Wall Street after data showed US manufacturing activity rose at its slowest pace in almost 2-1/2 years in September as rising interest rates cooled demand for goods.

London’s blue-chip FTSE 100 index rose 1.5%, building on gains from the previous session after the UK government reversed parts of its controversial tax cut plans. Germany’s DAX and Italy’s FTSE MIB each gained 2.3%, while France’s CAC 40 rose 2.7%.

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The recent rebound comes as central banks have gradually softened, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, citing the Bank of England’s recent intervention to support the gilt market and the reserve’s less-than-expected rate hike Bank of Australia. “We are now seeing a rebound in stocks, bonds, gold, oil, all on board, but let’s not forget that volatility remains high. So big jumps are also a sign that there is high volatility, and that itself is a sign that the market conditions are quite stressful,” she said.

Investors are focused on data due at 09:00 GMT that is likely to show that euro-zone producer prices continued to accelerate in August, with a likely annual jump to 43.1% from 39.5 % in July. Last week, data showed that consumer prices beat forecasts, hitting a record 10% in September, bolstering expectations for another jumbo rate hike later this month.

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The STOXX index is down 18.3% so far this year as the region grapples with an energy crisis exacerbated by the Russia-Ukraine conflict and hawkish signals from the US Federal Reserve and other major central banks to curb inflation becomes. On Tuesday, all sector indices of the STOXX 600 rose, led by a 4% jump in travel & leisure stocks and 3.6% in the technology sector.

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Chipmakers ASML, Aixtron, STMicroelectronics, Infineon, ASM International, BE Semiconductor and Nordic Semiconductor climbed between 3.7% and 5.7% on upbeat forecasts from Taiwan-based Foxconn and Samsung Electronics’ chip-to-order manufacturing unit. Sika rose 4.3% after the chemicals maker raised its full-year sales guidance and initiated the sale of part of the 850 million Swiss francs ($858.50 million) former BASF business it last bought year.

Greggs rose 8.8% after the British bakery and fast-food chain said it performed well in its latest quarter and showed its resilience amid mounting cost-of-living pressures.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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