European stocks rose sharply on the comments of the Fed

European stock markets showed a noticeable increase after the «dovish» statements by representatives of the US Federal Reserve System. 

The overall index of Europe's leading companies, the Stoxx Europe 600, gained 1.96%, reaching 452.48 points. The British FTSE 100 increased by 1.82% to 7,628.2. The German DAX gained 1.95%, the French CAC 40 – 2.01%, and the FTSE MIB and IBEX 35 indices of Italy and Spain rose by 2.3% and 2.2%, respectively. 

The deputy chairman of the US Federal Reserve, Philip Jefferson, stressed yesterday that the current dynamics of interest rates may suppress the economy, which makes the US Central Bank more cautiously assess the need for further tightening of monetary policy.

Laurie Logan from the Reserve Bank of Dallas also expressed the opinion that the rise in US bond yields may indicate that there is no need to increase rates.

It is worth noting that the IMF left the global economic growth forecast for 2023 at 3%, but lowered it to 2.9% for 2024. Inflation forecasts were adjusted upwards: for 2023 – up to 6.9%, and for 2024 – up to 5.8%.

Macro data from a number of countries had an additional impact on the dynamics of the European stock market. In the UK, retail sales in the five weeks to September 30 showed an increase of 2.7%.  In August, the rise was 4.1%. Despite the slowdown in growth, the increase in sales is due to rising inflation and increased living costs.

The tourism and recreation sector in Europe strengthened by 4% after the news of the beginning of the military conflict between Israel and Hamas. 

Mining companies increased their value by 3%, automotive companies – by 2.5%. This happened against the background of reports that China is considering further stimulating the economy to achieve the target growth of 5% this year.