Heading towards the longest winning streak of six years – E24

Heading towards the longest winning streak of six years – E24

Expectations of interest rate cuts in the euro zone are pushing European stocks to record levels.

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European stocks are heading towards achieving gains for the eighth week in a row. Thus, the stage is set for the longest winning streak since 2018, Bloomberg writes.

According to the news agency, optimism is driven by expectations of lower interest rates in the euro zone over the next few months.

Friday morning at 11 a.m., the broad Stoxx Europe 600 index was up 0.12 percent. But last month, it rose by 3.78 percent, after setting several records in recent weeks.

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Here's how Europe's major indices look at 11:00 a.m.:

  • The DAX index in Frankfurt rose by 0.26 percent
  • The FTSE 100 index in London rose 0.13%.
  • The CAC40 index in Paris rose 0.25%.
  • The IBEX 35 index in Madrid rose 1 percent
  • Milan's FTSEMIB index rose 0.53 percent

Billion acquisition

Telecom and auto stocks in particular are helping lift the European stock market, according to Bloomberg.

Shares of Swisscom, the largest telecommunications company in Switzerland, rose more than 2.6 percent after concluding an agreement to buy Vodafone Italy for 8.7 billion euros. This corresponds to more than NOK 100 billion at today's exchange rate.

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The company plans to merge Vodafone with its Italian subsidiary Fastweb Reuters.

Vodafone shares also received a boost from the acquisition, rising 4.3 percent by 11 a.m. Other telecom stocks are following suit, with Nokia and Telcom Italia both rising, according to data provider Infront.

Among auto stocks, there was an increase for Volkswagen, Renault and Porsche Automobile, all of which rose more than 1 percent.

Balance walking

The European Central Bank raised interest rates to 4 percent in September last year. It has remained there ever since, at the bank's highest ever level.

European investors are now trying to balance expectations of interest rate cuts from the European Central Bank in June, with a number of strong numbers from the United States, Bloomberg writes.

On Thursday, US producer prices came in stronger than expected, and inflation numbers for February, released earlier this week, were slightly higher than expected.

The key question is when central banks will start cutting interest rates, but to do that, they need inflation to stay low, Luis Garcia, portfolio manager at Mapfre ER, tells Bloomberg.

Dalila Awolowo

Dalila Awolowo

"Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff."

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