European shares gain 3% in past week on hopes over end to global rate hikes

AIB and Bank of Ireland shares were up by as much as 1% in the latest session, while Permanent TSB climbed by over 3%

Fri, 14 Jul, 2023 - 19:00

European shares were muted on Friday, but logged their biggest weekly percentage jump in over three months on hopes that easing inflation would allow the US Federal Reserve to pause rate hikes soon.

The pan-European Stoxx-600 index has gained over 3% this week, on track for its best week since the end of March and recouping last week’s losses.

In Ireland, AIB and Bank of Ireland shares were up by as much as 1% in the latest session, while Permanent TSB climbed by over 3%. Ryanair shares were little changed yesterday and through the past week, following their climb of 36% since the start of the year.

In Britain, bookmaker 888 ended talks with FS Gaming over board changes, and said any actions by the shareholder to change corporate control would likely put its UK licence at “significant risk”. The shares tumbled by 23% on the news.

Dollar tumbles

The dollar tumbled this week after reports on US consumer and producer prices stoked speculation that the economy had entered a disinflation phase and the Fed could pause its tightening soon after delivering a 25 basis points rate hike in July. Eurozone government bond yields also fell as traders started to pare back rate hike bets from the European Central Bank (ECB).

“There is a global sigh of relief if US inflation is under control, which does lift sentiment,” said HYCM chief market analyst Giles Coghlan.

“However, if you look at the inflation prints in the UK, the Bank of England has a battle against inflation in a way that the Federal Reserve doesn’t.

"[The ECB] is somewhere in between. Short-term interest rate markets for the ECB are seeing perhaps one, maybe two more interest rate hikes this year.”