© Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, November 10, 2022. REUTERS/Staff
By Shreyashi Sanyal
(Reuters) -European shares edged higher on Monday, as media stocks were boosted by Britain’s Informa, although caution prevailed after a top Federal Reserve policymaker warned that the U.S. central bank would not “soften” its fight against inflation.
The pan-European STOXX 600 index was up 0.2% by 0908 GMT, hovering near 11-week highs after recording its biggest weekly gain in nearly eight months on Friday.
British events organiser Informa Plc jumped 5.0% after it raised its full-year earnings outlook, boosting the European media sector index by 0.8%. Pearson Plc and German ticketing company CTS (NYSE:CTS) Eventim rose over 1% each.
Still, the broader index was trading in a narrower-than-usual two-points range.
The caution came after Fed Governor Christopher Waller said on Sunday that markets should now pay attention to the “endpoint” of interest rate hikes, not the pace of each move, and that the endpoint was likely still “a ways off”.
“The Fed is trying to communicate to markets that it isn’t going to pivot and is going to continue with this two-way sort of communication of slowing the pace of rate hikes but that doesn’t necessarily mean it will get to a lower endpoint,” said Giles Coghlan, chief market analyst at HYCM in London.
Readings on U.S. inflation and another employment report will be watched before the Fed’s next policy meeting in December.
The STOXX 600 has fallen 11.2% so far this year, less than the S&P 500 index‘s 16.2% fall. But even at discounted levels, analysts note that European stocks are not as attractive as their U.S. counterparts.
“A war in Europe (Russia-Ukraine) is never good for business. So, if you’ve got that perennial risk then I don’t think it offers value, especially heading into winter it is even more uncertain,” Coghlan noted.
Eurozone data has also painted a gloomy picture for the economy, with the European Central Bank sticking to rapid rate hikes to battle inflation even at the risk of tipping the bloc into a recession.
Among stocks, Roche Holding AG (OTC:RHHVF) slid 3.9% after its Alzheimer’s drug candidate could not be shown to markedly slow dementia progression in two drug trials.
Military equipment manufacturer Rheinmetall rose 3.1% after the German company on Sunday agreed to buy Spanish explosives and ammunition maker Expal Systems for an enterprise value of 1.2 billion euros ($1.24 billion).
The basic resources index rose 0.6% as copper prices stayed near five-month highs amid supportive measures from the Chinese government for its ailing property sector. [MET/L]