Exporters Lead European Stock Rally as Fed Delivers on Rate Rise

Fed Liftoff Highlights U.S. Economy's Strength
  • Germany's DAX among best performers in western Europe
  • France's Casino tumbles as Carson Block bets against it

Exporters and financial companies led a rally in European stocks after the Federal Reserve fulfilled investor expectations by raising rates for the first time in almost a decade.

Investec Plc and Man Group Plc rose at least 3.6 percent, while carmakers Volkswagen AG and Daimler AG advanced 3.3 percent or more. Germany’s DAX Index was among the best performers in western Europe, up 2.6 percent.

“We can all celebrate,” said Michael Woischneck, who oversees the equivalent of $156 million at Lampe Asset Management in Dusseldorf, Germany. “The Fed finally did it and markets survived. It wasn’t armageddon. People are very relieved that they didn’t do a 50 basis-point hike and that they didn’t do nothing at all. We also still have a data-dependent Fed, with the flexibility to react. That makes markets more comfortable.”

The Stoxx Europe 600 Index climbed 1.2 percent to 364.9 at the close of trading, paring earlier gains of as much as 2.3 percent. It rose for a third day, after Fed Chair Janet Yellen signaled the U.S. economy is performing well and any further tightening will be slow. Yesterday’s quarter-point rate increase marked the culmination of the Fed’s yearlong effort to prepare investors for the end of an unprecedented era of stimulus.

The volume of shares changing hands on Stoxx 600 companies was 11 percent higher than the 30-day average, data compiled by Bloomberg show. A gauge measuring volatility expectations for euro-area stocks slipped 11 percent, the most in three months.

The Stoxx 600 is set for its first weekly rise in three, trimming a monthly drop to 5.3 percent. After a 14 percent jump from its September low through end-November, the Stoxx 600 lost as much as 9.3 percent amid disappointing stimulus measures from the European Central Bank and a deepening of the rout in commodities. It’s on course for its worst December since 2002.

Among other stocks active, Standard Chartered Plc, which gets most of its revenue from Asia, climbed 7.3 percent after Hong Kong raised its base rate for the first time in nine years. Hellenic Exchanges SA gained 7.3 percent after a filing showed Goldman Sachs Group Inc. raised its stake in the bourse operator in December.

Casino Guichard-Perrachon SA tumbled 12 percent for the biggest decline on the Stoxx 600 after short seller Carson Block said he’s betting against the French supermarket operator. Rallye SA, its biggest shareholder, plunged 19 percent after Block said the stock is worth close to zero.

Elementis Plc declined 6.6 percent after the specialty-chemicals maker forecast full-year earnings at the lower end of analysts’ estimates, citing challenging markets.

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