European Stocks Cap Longest Winning Run Since July On Fed Hopes

The Euronext stock exchange in Paris.

(Bloomberg) -- European shares advanced for a fourth day in their longest winning streak since July, fueled by hopes that the Federal Reserve's rate-hiking cycle is over.

The Stoxx Europe 600 Index rose by the close, with real estate and auto shares gaining the most. The Stoxx 600 Real Estate Index surged the most in nine months as the debt-laden sector benefited from easing bond yields. Novo Nordisk A/S shares provided the biggest boost to the index after it reported a jump in third-quarter sales as demand continued unabated for its obesity and diabetes drugs.

Among other single stocks, Deutsche Lufthansa AG jumped after the airline said it's on track to meet its financial targets this year and in 2024. Shell Plc gained after it accelerated the pace of share buybacks, while ING Groep NV declined after it warned that interest income may come under pressure.

Read More: Nuveen's CIO Sees Year-End US Stock Rally as Rates Fear Subsides

Investor sentiment got a boost on Wednesday evening after the Fed left interest rates on hold for a second time and Chair Jerome Powell hinted that the hikes may be over. The Bank of England followed suit and left its benchmark lending rate at a 15-year high, with Governor Andrew Bailey saying it was “much too early” to be thinking about cuts.

European shares are having a good week, following a rout in October that brought the gauge close to erasing the year's gains. Investors remain focused on monetary policy, while parsing the latest company results and tracking developments in the Israel-Hamas war.

“Yesterday's decision was pretty much expected. Now the question is how fast long-term bond yields will drop over the coming quarters as growth slows down in the US and the European economy faces a recession,” said Liberum strategist Susana Cruz. “Although we still see some upside coming from declining yields, I think growth fears, and poor results as the ones we've seen so far in Europe, will drag down equities over the next six to nine months.”

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--With assistance from Farah Elbahrawy and Sagarika Jaisinghani.

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