European Stocks Rise to Highest Since 2000 After Fed StatementAlan Soughley and Roxana Zega
European stocks climbed to their highest level since 2000, as the Federal Reserve acknowledged a moderation in economic growth, fueling speculation it won’t be in a rush to raise interest rates.
All but two of the 19 industry groups on the Stoxx Europe 600 Index advanced, with energy companies leading gains. Royal Dutch Shell Plc rose 1 percent, while Premier Oil Plc added 8 percent, for the biggest increase on the equity benchmark.
The Stoxx 600 increased 0.6 percent to 400.83 at the close of trading. Equities climbed yesterday as U.K. shares rallied after a budget presentation and Swedish stocks jumped after a rate cut. The Stoxx 600 has surged 17 percent this year.
“On the back of yesterday’s announcement, they gave themselves more room for this slower interest rates rises, which is good for equities and good for bonds,” said William Hobbs, head of equity strategy at Barclays Plc’s wealth-management unit in London, referring to the Fed.
A U.S. rate increase in April is unlikely and policy won’t be tightened until the central bank is “reasonably confident” inflation will return to its target and the job market improves further, according to the Fed’s statement. It also dropped an assurance it will be “patient” in raising interest rates.
The Fed cut its estimate for where the benchmark U.S. interest rate will be by the end of 2015, easing concern that tighter monetary policy would curb demand for riskier assets.
A gauge of commodity producers rose the most in more than three weeks as metals traded higher. BHP Billiton Ltd. gained 1.9 percent and Fresnillo Plc jumped 5.4 percent.
Among stocks moving on corporate news, HeidelbergCement AG climbed 0.9 percent, paring earlier advances of as much as 3.4 percent. The world’s third-biggest cement maker cut debt by more than analysts expected, even without taking into account the proceeds from disposals.
Deutsche Lufthansa AG climbed 2.4 percent after saying that earnings at its cargo unit should continue increasing for at least three years even as the European economy stutters.
SAP SE added 0.9 percent as the German supplier of software announced a 1.3 billion euro ($1.4 billion) dividend.
Next Plc slid 4 percent after the U.K.’s second-biggest clothing retailer lowered its full-year sales forecast.
Siemens AG slipped 4.2 percent after Chief Executive Officer Joe Kaeser told investors that the falling oil price and operational difficulties are hurting profit and sales at Europe’s biggest engineering company.
Investors are also watching negotiations between Greece and its creditors. German Chancellor Angela Merkel said there’s no quick solution for the Mediterranean nation’s financing crunch. Speaking to parliament in Berlin today before leaving for an EU summit in Brussels, Merkel said the bloc is ready to help if Greece is ready to meet its reform obligations.
Greece’s ASE Index slid 1.9 percent, its lowest level since Jan. 30, and the worst performance of 18 western-European markets.
“There’s no doubt that European stocks are a good place to be,” said Hobbs. “However, they have run very fast and very far. You’ve got some conflicting forces with regards to European stocks at the moment. The Greek negotiations are starting again and there’s plenty of bad feeling between both sides.”