LONDON (Reuters) – European shares joined an overnight rally on Wall Street after dovish comments from Federal Reserve Chair Jerome Powell boosted investor sentiment towards stock markets despite uncertainty over a possible escalation in the U.S./China trade dispute.
The pan-European STOXX 600 benchmark was up 0.6 percent by 0940 with all major bourses and most sectors trading comfortably in positive territory.
Traders believe the risk of fast-rising interest rates hurting the U.S. economy and the stock market is now on the downside after Powell said monetary policy rate is now “just below” estimates of a level that neither brakes nor boosts a healthy economy.
“If you were looking for a trigger for a December rally in equities, we got it last night from the Federal Reserve”, wrote Neil Wilson, chief market analyst for Markets.com.
The new-found optimism comes after sell-offs in February and October prompted markets analysts to question the sustainability of the longest bull market in recent history.
A Reuters survey published on Thursday shows however that a majority of analysts believe that the upward trend isn’t over just yet with over 40 percent of strategists saying the current run has more than a year to go.
Tech and cyclical stocks, which have been some of the hardest hit in the recent sell-off, were leading indexes higher across the continent on Thursday morning.
Deutsche Bank made a sudden 4 percent fall after it emerged in morning trading that roughly 170 criminal police officers, prosecutors and tax inspectors searched six of its offices in and around Frankfurt on money laundering allegations.
Elsewhere in the banking sector, British banks made moderate moves, from HSBC down 0.3 percent to Lloyds rising 1 percent, after all seven lenders passed this year’s Bank of England stress tests.
Shares in Swedish radiation therapy gear maker Elekta posted one of the worst performances, down 7.7 percent after reporting an unexpected drop in operating profit for a second straight quarter.
Real estate was one of the rare sectors in the red. Britain’s Intu sank 36 percent after deputy chairman John Whittaker abandoned a plan to buy the British shopping centre group. This reignited worries about the outlook for the battered sector and Intu’s rival Hammerson fell 6.5 percent.
(Reporting by Julien Ponthus; Editing by Josephine Mason, Richard Balmforth)