LONDON: Europe’s stock markets rose Wednesday on “soothing” remarks from US Federal Reserve boss Jerome Powell and rocketing energy-sector profits, with London striking a record peak, dealers said.
Oil prices rose strongly on fresh bets of rebounding Chinese demand as the superpower emerges from almost three years of tough zero-Covid restrictions.
The British capital’s FTSE 100 index hit a record 7,934,30 points.
In the eurozone, Frankfurt and Paris indices jumped on news of spectacular annual profits at French energy major TotalEnergies and Norwegian peer Equinor, mirroring UK rivals BP and Shell.
The sector has reaped gigantic earnings as a result of soaring oil and gas prices following key energy producer Russia’s war on Ukraine.
Traders also digested remarks from Powell, who reiterated Tuesday that inflation was coming down – but conceded interest rates might need to go higher than expected to get it under control.
“Powell had just the soothing message the market was looking for,” said AJ Bell investment director Russ Mould.
“The positive sentiment has allowed the FTSE 100 to reach new sunny uplands, hitting a fresh all-time high.”
A run of key US data in recent months has indicated a series of bumper hikes last year was beginning to pay off, fuelling hopes that the Fed could pause its tightening cycle and even lower borrowing costs at the end of the year.
But a forecast-busting jobs report on Friday – showing half a million new jobs created in January – stoked speculation that more increases were on the way.
“Concerns that last Friday’s bumper jobs report would see the Fed react to what it perceived as an overheating labour market were eased, with Powell’s relatively relaxed response possibly reflecting the seasonal anomalies which often affect the January numbers,” added Mould.
“Whether Powell will remain so relaxed if the next set of payroll figures are similarly elevated is open to question,” he said.
Powell’s remarks were also similar to what he said last Wednesday, after the bank’s latest policy meeting, which sparked an equities rally.
And Wall Street again pushed higher Tuesday.
Eyes are now on US inflation data next week.
“Hopes that inflation is cooling and that the aggressive interest rate hiking policy of central banks may be peaking has given major indices a strong start to the year,” Interactive Investor analyst Richard Hunter told AFP.
“The current round of optimism will face further tests in the months to come – but for the moment, the investing glass is half-full.”
Key figures around 1200 GMT
London – FTSE 100: UP 0.7 percent at 7,920.54 points
Frankfurt – DAX: UP 0.7 percent at 15,428.50
Paris – CAC 40: UP 0.5 percent at 7,164.14
EURO STOXX 50: UP 0.4 percent at 4,226.93
Tokyo – Nikkei 225: DOWN 0.3 percent at 27,606.46 (close)
Hong Kong – Hang Seng Index: DOWN 0.1 percent at 21,283.52 (close)
Shanghai – Composite: DOWN 0.5 percent at 3,232.11 (close)
New York – Dow: UP 0.8 percent at 34,156.69 (close)
Euro/dollar: UP at $1.0750 from $1.0726 on Tuesday
Pound/dollar: UP at $1.2105 from $1.2048
Euro/pound: DOWN at 88.77 pence from 89.04 pence
Dollar/yen: DOWN at 130.78 yen from 131.07 yen
Brent North Sea crude: UP 1.0 percent at $84.55 per barrel
West Texas Intermediate: UP 1.3 percent at $78.14 per barrel