European Stocks Rise as Focus Shifts to Fed After ECB

(Bloomberg) -- European stocks gain on Friday as traders look ahead to the Federal Reserve’s interest-rate decision next week and weigh if a big cut is possible.

The Stoxx 600 Index rose 0.5% as of 8:23 a.m. in London, with Danish stocks hitting a record high for the first since November 2021. The country’s index was boosted by Novo Nordisk A/S and the news that DSV signed an agreement with Deutsche Bahn to acquire 100% of Schenker AG and its affiliates in an all-cash transaction. 

All sectors were up, with resources leading the gains and consumer stocks being the biggest underperformers. 

European stocks recouped some of last week’s declines thanks to the expected interest rate cut from the ECB this week. Still, the market remains volatile and the chances for a big upside for stocks are currently slim.  

However, it seems the market doesn’t expect recession risks to increase for the moment. 

“With the ECB not in panic mode but observing slower growth and persistent core inflation, markets are beginning to see how recession risks are probably marginally retreating,” said Florian Ielpo, head of macro research at Lombard Odier Investment Managers.

While this bearish sentiment has been more priced into the bond market rather than equities for the moment, “the Fed will likely be the cornerstone of market movements for a while,” added Ielpo. 

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