New Telegraph

European stocks set for sixth consecutive week of gains

European stocks were on track for a sixth successive week of gains on Friday and government bond yields globally traded near multi-week lows as investors reacted to positive data and signs central banks may not hike rates as aggressively as feared.

The 10-year treasury yield dipped to 3.65 per cent on its return from the Thanksgiving holiday, its lowest since October 5 and down from as high as 4.34 per cent in mid October. Germany’s 10-year yield, the eurozone benchmark, stood at 1.91 per cent, just off a seven-week low hit a day earlier.

Europe’s Stoxx 600 was little  changed on Friday and heading for a 1.5 per cent weekly gain, its sixth weekly percentage gain in succession, after taking a battering earlier in 2022.

“The correction had affected all major asset classes with the exception of the dollar and hard commodities and it’s now a big reversal of that,” said Olivier Marciot, head of investments, for multi-asset, at Unigestion.

“The pace of the [central bank] tightening cycle was unprecedented and created that shock, and now that specific factor is stabilising it creates lift for all asset classes,” Olivier added. The US Federal Reserve has raised interest rates aggressively throughout this year, but a “substantial majority” of Fed policymakers agreed it was “likely [to] soon be appropriate” to slow the pace of interest rate rises, minutes of their latest meeting showed on Wednesday.

The expectation that the peak in rates is approaching were raised earlier in November when US October inflation data came in cooler than expected. Futures markets show investors now see US rates peaking just above 5% around May, and are pricing in roughly two thirds odds that the Fed slows to a half-point hike on December 14 after a string of 75-basis-point increases

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