Friday, February 23

Europe’s STOXX 600 hits one-week high; focus on UK’s fiscal U-turn

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Europe’s STOXX 600 climbed on Friday amid hopes of a reversal in some fiscal steps announced by the British government, with investors buying beaten-down names despite worries around economic growth and its impact on corporate earnings.

The region-wide STOXX 600 index was up 1.8% by 0709 GMT, hitting its highest level since Oct 7. Shares in the region took cues from a positive finish on Wall Street overnight.

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US stocks closed more than 2% higher amid technical support and short-covering, even after a red-hot consumer price index report bolstered the case for a fourth straight 75 basis point rate hike from the Federal Reserve next month.

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The sharp reversal in mood also put the STOXX 600 on pace for a weekly gain, erasing losses it suffered till Thursday’s session on worries about a potential recession from central banks’ aggressive monetary tightening actions.

Speculation of a U-turn in UK’s fiscal plans aided sentiment further. British Finance Minister Kwasi Kwarteng cut short his trip to Washington for this week’s global finance minister meetings and headed back to London.

Financial Times reported that the British government may reverse up to 24 billion pounds ($27.05 billion) of tax cuts. London’s FTSE 100 index and midcap FTSE 250 index gained 1.4% and 1.7%, respectively.

All the sectoral indexes advanced in early trading, led by a 2.7% jump in real estate stocks.

TomTom added 2.4% after the Dutch navigation and digital mapping company raised its 2022 outlook, as increased car production and higher location technology sales drove third-quarter results. ($1 = 0.8872 pounds) (Reporting by Devik Jain in Bengaluru; editing by Uttaresh. v)