(Bloomberg) -- European stocks were steady, hovering around their highest level since January 2022, after a strong year-end rally fueled by growing optimism that central banks will cut interest rates next year.
The Stoxx 600 Index was down 0.1% as of 13:30 p.m. in London, with trading volumes 55% below the 30-day average. Healthcare and the food, beverage and tobacco sector led gains, while banks and consumer products lagged.
The benchmark is set to end 2023 up about 13% after a two-month rally that's been fueled by slowing inflation, economies avoiding major contractions and hopes for pivots by central banks.
Haig Bathgate, head of investments at Atomos, said expectations of peaking interest rates and economic data holding up are lifting sentiment in the US. In Europe, the backdrop is more mixed but it should generally follow the same direction.
In the US, initial applications for jobless claims rose to a level consistent with a resilient labor market, with the four-week moving average little changed.
“The year-end stock rally hinges on the prospect of a Fed pivot,” said Morgane Delledonne, head of investment strategy for Europe at Global X ETFs.
For more on equity markets:
- ADVISORY: ECM Watch Europe Will Resume on Jan. 8
- US Stock Futures Unchanged; EchoStar, Coinbase Gain
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--With assistance from Farah Elbahrawy.
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