Miners lift European shares; investors await policy cues from Fed’s Powell

(Reuters) -European shares gained on Friday on a strong boost from miners, while investors awaited policy comments from Federal Reserve Chair Jerome Powell after cooler-than-expected inflation prints bolstered bets of interest rate cuts.

The pan-European STOXX 600 was up 0.7% at 0920 GMT, after logging its strongest monthly gain of 6.4% in November since the start of the year, also helped by a fall in eurozone bond yields.

It is now on course to log its third straight weekly gain, led by technology and financial services shares.

Miners were the top sectoral gainers in early trading, rising 3.3% to a four-month high following higher metal prices on a softer dollar and supportive data from top consumer China.

Anglo American (JO:AGLJ) topped the STOXX 600 with a 6.3% gain, while Antofagasta (LON:ANTO) jumped 4.1% after UBS upgraded both the miners to “buy” from “neutral”.

All eyes are now on comments from Fed’s Powell later in the day for further clues on global policy outlook after data out of Europe and the United States on Thursday reflected a sustained drop in inflation.

“An overall weaker eurozone inflation print is some relief. Some point in the future investors are seeing some relief to eurozone via lower rates, and that pushes back against some of the stagflation fears that have been growing,” said Giles Coghlan, chief market analyst at brokerage GCFX Ltd.

“I don’t think we’re out of the woods and the eurozone is very data dependent… this week is just in a little bit of relief in that narrative.”

Goldman Sachs now expects the European Central Bank to deliver its first rate cut in the second quarter of 2024, compared to earlier forecast of third quarter of next year.

However, joining the choir of ECB officials snubbing rate cut bets, Bundesbank President Joachim Nagel noted risks are skewed towards more negative outcomes, so a further rate hike cannot be dismissed and cuts should not even be discussed.

Meanwhile, fresh data showed the broad-based downturn in euro zone manufacturing activity eased slightly last month, but the sector remained deeply rooted in contractionary territory.

Other data sets showed Italy’s economy grew 0.1% in the third quarter, thanks to exports and firm consumer spending, revising up preliminary data. The benchmark index was up 0.5%.

Among individual stocks, Signify jumped 5.6% as the world’s biggest lights maker announced a new organisation structure to reduce costs.

Bechtle AG dropped 5.3% after announcing a convertible bond offering.

Struggling Swedish streaming company Viaplay tanked 76% to a record low on plans to raise new equity and restructure its debt.

Source: Investing.com