European shares rose on Monday as investors bet on big U.S. banks continuing to post strong quarterly results this week, while also looking forward for an end to the Federal Reserve’s rate-hiking cycle.
European shares rose on Monday as investors remained optimistic about the performance of big U.S. banks, which are expected to post strong quarterly results this week. This sentiment was also fueled by the hope that the Federal Reserve’s rate-hiking cycle will come to an end soon.
The pan-European STOXX 600 index rose 0.4 percent, with most of the major bourses in the region trading in positive territory. The banking sector led the gains, with the STOXX Europe 600 Banks index rising 1.2 percent.
Investors are looking forward to the earnings reports of JPMorgan Chase, Goldman Sachs, and Wells Fargo, which are set to be released later this week. These reports are expected to show strong growth in earnings per share, driven by increased lending activity and higher interest rates.
The Federal Reserve’s rate-hiking cycle has been a major concern for investors, as higher interest rates can reduce the profitability of banks and other financial institutions. However, there is growing optimism that the central bank may pause or slow down its rate hikes in response to recent market volatility and signs of a slowdown in global growth.
This view was supported by the release of the minutes from the Fed’s December policy meeting, which showed that some officials were concerned about the risks of further rate hikes and preferred a more cautious approach. This has led to a decline in U.S. Treasury yields and a weaker U.S. dollar, which has been supportive of European equities.
Despite the recent volatility in global markets, European stocks have held up relatively well, with the STOXX 600 index down only 1.2 percent so far this year. This is in contrast to the sharp declines seen in U.S. and Asian markets, which have been hit by concerns about trade tensions, slowing growth, and rising interest rates.
Looking ahead, investors will be closely watching the upcoming earnings reports and economic data releases for further clues about the health of the global economy and the outlook for monetary policy. While there are still uncertainties and risks, the current environment remains supportive of European stocks and there are reasons to be cautiously optimistic about the year ahead.
The pan-European STOXX 600 index (.STOXX) edged 0.3% higher, after hitting its highest in over a year last week, while the blue-chip STOXX50 index (.STOXX50) hit a 22-year peak.
Miners led the sectoral gains, rising 1.6%, while technology shares fell 0.6%.
Investors will closely monitor slew of earnings reports led by Goldman Sachs (GS.N), Morgan Stanley (MS.N) and Bank of America (BAC.N) later in the day.
Last week, Citigroup Inc (C.N), JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC.N) beat earnings expectations, benefiting from rising interest rates and easing fears of stress in the banking system.
Commentary from European Central Bank (ECB) officials including President Christine Lagarde will also be on investors’ radar.
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