European shares rise as US inflation data signals end of rate-hike cycle

European shares rose on Friday and were set for a fourth straight weekly gain, buoyed by hopes that the US Federal Reserve could soon pause its aggressive interest rate-hike cycle following cooler-than-expected inflation in March.

The pan-European STOXX 600 gained 0.4 percent, while rising 1.4 percent for the week in the index’s longest winning streak since late last year – after Singapore’s central bank kept its key rates unchanged, signaling that the Fed’s next hike could be the last this cycle.

Real estate shares led the gains, rising 1.6 percent, while insurance-sector shares slid 0.9 percent.

The blue-chip STOXX 50 index held on to its 22-year highs hit on Wednesday, adding 0.4 percent.

“No news has been good news for the markets since after the investors were comforted that banking sector crisis has been controlled and will not see any spillovers,” said Michael Field, European equity strategist, Morningstar.

“That is one of the reasons why we see European equities gain in last one month.”

Investors will closely monitor US earnings starting later in the day with focus on big banks including JP Morgan Chase & Co, Wells Fargo and Citigroup, as last month’s regional banking crisis and a slowing economy cast a shadow over the banking sector.

Germany’s wholesale prices rose in March at a slower pace than last month on the year, but rose 0.2 percent, compared with February.

European shares had a healthy start to 2023 but were hit by recent banking crisis that weighed on sentiment and mixed economic data raised uncertainty over outlook for global interest rates.

European Central Bank’s Governing Council member Bostjan Vasle said on Thursday the central bank needs to keep raising rates, given stubbornly high underlying inflation.

TomTom jumped 7.7 percent after the Dutch navigation and digital mapping company reported better-than-expected first-quarter revenue.

Dechra jumped 35.7 percent, as the British veterinary pharmaceuticals firm said it had entered into talks with private equity group EQT for a possible offer in a 4.63 billion pound ($5.80 billion) all-cash deal.

Shares in rail transport manufacturer Alstom were, however, down 4.4 percent after news that its CFO will leave.