# European shares set for weekly gain on U.S. inflation outlook Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-04-14 Category: TRADING Category URL: https://financedigest.com/category/trading Meta Title: European Shares Set for Weekly Gain as U.S. Inflation Outlook Improves Meta Description: Follow the rise of European shares amid U.S. inflation outlook, potential Fed rate hike trajectory, and ECB rate hikes, with positive market sentiment driving URL: https://financedigest.com/european-shares-set-for-weekly-gain-on-u-s-inflation-outlookhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-04-14t015741z1lynxmpej3d01jrtroptp4global-markets-1736814145309-compressed.jpg) # European shares set for weekly gain on U.S. inflation outlook By Elizabeth Howcroft LONDON (Reuters) -European shares rose in early trading on Friday, with the STOXX 600 up for a fifth session in a row, as expectations rose that the U.S. Federal Reserve may soon finish [raising interest rates](https://www.financedigest.com/european-central-bank-to-raise-deposit-rate-to-3-25-by-mid-year-reuters-poll.html "European Central Bank to raise deposit rate to 3.25% by mid-year: Reuters poll"). Asian shares gained after the Monetary Authority of Singapore (MAS) surprised many by leaving policy unchanged, saying the tightening already [underway would ensure inflation slowed sharply later this year](https://www.financedigest.com/2017-cfo-outlook-top-priorities-as-new-year-gets-underway.html "2017 CFO Outlook: Top Priorities as New Year Gets Underway"). [Investors were betting that the Fed](https://www.financedigest.com/oil-steadies-after-dipping-on-china-outlook-investors-await-fed-clues.html "Oil steadies after dipping on China outlook; investors await Fed clues") would only raise rates one more time in its rate-hiking campaign, after U.S. producer price [data and labour market data on Thursday pointed to inflation](https://www.financedigest.com/european-shares-rise-as-us-inflation-data-signals-end-of-rate-hike-cycle.html "European shares rise as US inflation data signals end of rate-hike cycle") cooling. This came after [CPI data on Wednesday showed a small rise](https://www.financedigest.com/euro-rises-after-spanish-cpi-dollar-slips-towards-8-mth-low.html "Euro rises after Spanish CPI, dollar slips towards 8-mth low") in U.S. [consumer prices](https://www.financedigest.com/investors-warn-big-consumer-firms-over-price-hikes-as-competitors-gain.html "Investors warn big consumer firms over price hikes as competitors gain") in March. The [risk that the Fed will have to overdo it and cause a hard landing in its fight against inflation](https://www.financedigest.com/inflation-trumps-financial-risks-as-central-bank-tightening-set-to-continue.html "Inflation trumps financial risks as central bank tightening set to continue") has receded,” said Holger Schmieding, chief economist at Berenberg. “This underpins … the general [“risk on” mood in markets.”](https://www.financedigest.com/concern-over-us-default-risk-grips-global-markets-as-talks-resume.html "Concern over US default risk grips global markets as talks resume") Markets are expecting that the rate gap between the Fed and the ECB will narrow further over this summer,” he added, citing expectations of further [European Central Bank](https://www.financedigest.com/dollar-outshines-euro-sterling-amid-european-bank-jitters.html "Dollar outshines euro, sterling amid European bank jitters") rate hikes. At 0829 GMT, the MSCI [World Equity Index was up 0.2% on the day](https://www.financedigest.com/covid-war-and-fed-push-world-stocks-down-for-4th-day.html "COVID, War and Fed push world stocks down for 4th day"), near its highest since mid-February. The STOXX 600 was up 0.4%, in its fifth consecutive day of gains, and on [track for a 1.5% gain on the week](https://www.financedigest.com/the-nasdaq-100-on-track-to-have-its-best-week-since-march-2010.html "The Nasdaq 100 On Track to Have its Best Week Since March 2010"). London’s FTSE 100 was up 0.3%. The euro benefited from expectations that the ECB will continue to raise rates, after [data on Thursday showed euro](https://www.financedigest.com/dollar-trims-gains-vs-euro-after-u-s-inflation-data.html "Dollar trims gains vs euro after U.S. inflation data") zone industrial output was stronger than expected in February. The euro was up 0.1% on the day at $1.10565, having earlier hit its highest in around a year, while European government [bond yields were set for a weekly rise](https://www.financedigest.com/global-equities-gain-as-rising-bond-yields-pressure-gold.html "Global equities gain, as rising bond yields pressure gold"). The benchmark 10-year German yield was at 2.379%, on track for a roughly 20 basis point rise on the week overall – its [biggest weekly](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down") rise so far in 2023. The U.S. [dollar index was a touch lower](https://www.financedigest.com/ea-lowers-bookings-expectation-on-strong-dollar-gaming-slowdown.html "EA lowers bookings expectation on strong dollar, gaming slowdown"), at 100.91, on track for its fifth consecutive week of declines. Oil prices slipped after the West’s energy watchdog warned that output cuts could exacerbate an oil supply deficit and hurt consumers, but Brent crude futures and West Texas Intermediate crude futures were still [set for a fourth week of overall gains](https://www.financedigest.com/londons-ftse-100-edges-higher-set-for-fourth-weekly-gain.html "London’s FTSE 100 edges higher, set for fourth weekly gain"). Investors are now bracing for earnings from Citigroup Inc, Wells Fargo and JPMorgan Chase & Co which could [test the bullish mood given recent stress](https://www.financedigest.com/what-to-make-of-the-headlines-brexit-and-bank-of-england-policy-eba-bank-stress-tests.html "What to make of the headlines? Brexit and Bank of England policy, EBA bank stress tests") in the sector. We will be looking at bank earnings calls to follow discussions around deposits, lending standards, and any adjustments to bank funding that might be planned, including more [debt sales,”](https://www.financedigest.com/european-junk-debt-sales-spring-back-to-life-as-sentiment-improves.html "European junk debt sales spring back to life as sentiment improves") analysts at NatWest Markets said. [Investors are also](https://www.financedigest.com/old-trafford-attracting-not-just-footballers-from-around-the-world-but-also-investors.html "Old Trafford attracting not just footballers from around the world, but also investors") waiting for U.S. [retail sales](https://www.financedigest.com/italy-inflation-adjusted-retail-sales-fell-in-2022.html "Italy inflation-adjusted retail sales fell in 2022") data, due later on Friday. (Reporting by Elizabeth Howcroft, additional reporting by Wayne Cole; Editing by Lincoln Feast and Alexander Smith) --- This blog is powered by Superblog. 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