Home ›› 04 May 2023 ›› Stock
European shares rose on Wednesday on optimism that the U.S. Federal Reserve could hint at a future pause in its tightening cycle due to resurfacing banking sector worries and a potential debt default.
The pan-European STOXX 600 index (.STOXX) climbed 0.4%, after a sharp selloff in the previous session.
Food and beverages (.SX3P) gained the most on the index, rising 1.2%, while oil and gas shares (.SXEP) extended losses from Tuesday, falling 0.4%, reported Reuters.
Automobile shares (.SXAP) fell 0.5%, led by Stellantis (STLAM.MI), the world’s third-largest carmaker by sales, which slumped1.9% after its inventories rose in the January-March period as logistic problems were still being resolved, weighing on its market share.
Investors anticipate that the Fed will follow through with a quarter percentage point hike later in the day. The statement is due to be released at 2 p.m. ET (1800 GMT), with Chair Jerome Powell scheduled to speak to reporters half an hour later. The demise of First Republic Bank, the third U.S. bank to collapse since March, again triggered concerns about the health of other mid-sized lenders, although European banks have so far been relatively unscathed.
Data on Tuesday showed banks are sharply turning off credit taps, making a case for a smaller hike by the European Central Bank on Thursday.
“Following the Bank Lending Survey, the case is strengthening that the ECB will ‘only’ deliver 25 basis points this week and may not reach 3.75%,” Commerzbank Research strategists said in a note.
