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European shares rise as markets benefit from warm weather

by SuperiorInvest

European stocks opened mostly higher on Friday as markets continued to reap the benefits of a warm winter and lower energy costs.

Across the region, the Stoxx 600 rose 0.4 percent, with Germany’s Dax up 0.2 percent and France’s Cac 40 up 0.4 percent. London’s FTSE 100 fell 0.3 percent.

The price of European natural gas has fallen to its lowest level since Russia’s large-scale invasion of Ukraine began last week.

“In the short term, European equities have relative strength versus the US as their composition is less sensitive to interest rates and has yet to experience the full dividend of milder weather and lower energy costs,” said Antonio Cavarero, chief investment officer at Generali Insurance Asset Management.

U.S. futures fell, with contracts tracking the blue-chip S&P 500 down 0.2 percent and tech-heavy Nasdaq Composite peers down 0.5 percent. Thursday’s rally, which saw the S&P 500 rise 0.5 percent and the Nasdaq up 0.7 percent, was a brief respite for investors; the indexes fell 2.5 percent and 2.6 percent this week.

In Asia, the Hang Seng index fell 1.7 percent, while China’s CSI 300 lost 1 percent. Despite trading group Alibaba beating analysts’ expectations with fourth-quarter earnings, its shares fell 5.36 percent, indicating investor jitters about China’s economy following its post-Covid reopening.

US personal consumption expenditure data, the Federal Reserve’s preferred inflation metric, will be released at 1.30pm UK time. If the data show that the economy is warmer than expected, it will be seen as further evidence that the Fed will stick to its aggressive rate hike agenda. In recent weeks, robust retail and employment data have convinced investors of the need for further price increases.

Analysts at SEB Research said: “The outlook for core PCE is mixed. Our forecast is for a monthly increase of 0.3-0.4 percent, which is slightly below the consensus estimate but still too high to be in line with the Fed’s target.

The euro fell 0.1 percent, while the dollar index, which measures the greenback against a basket of six currencies, was flat.

U.S. Treasuries fell sharply, with yields on the 10-year and two-year notes rising 0.01 percentage point to 3.89 percent and 4.7 percent, respectively. Yields on 10-year German bonds stagnated at 2.47 percent.

Brent crude rose 1.2 percent to $83.18 a barrel, while WTI, the U.S. equivalent, also rose 1.2 percent to $76.28 a barrel.

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