STOXX 600 braces for best week in more than 3 months on prospect of US rate cut By Reuters

By Pranav Kashyap

(Reuters) – European shares gained for a fourth straight session on Friday as bullish risk-on sentiment prevailed in global markets following strong U.S. retail sales data.

The pan-European rose 0.3 percent to two-week highs. The benchmark was on track for its best week since May 6.

London fell 0.2 percent after British retail sales rose 0.5 percent in July, in line with forecasts.

Almost all regional bourses were trading in the green, with Italy performing similarly with a gain of 2.1%.

The auto sector rose 1.3%, boosted by earnings at Ferrari (NYSE: ) which rose 2.7% and Stellantis (NYSE: ) which gained 3%, despite the Euro-American automaker was sued by US shareholders who said the firm cheated them by hiding rising stocks and other weaknesses.

Overnight US retail sales data signaled resilient consumer spending, easing fears of an impending recession in the world’s largest economy.

Investor sentiment stumbled in early August as a weak US jobs report fueled fears of a looming recession and led to a global sell-off in stocks.

The STOXX 600 has since bounced back, erasing all losses, as a slew of positive U.S. economic data eased recession worries.

Markets will look forward to next week’s Jackson Hole event in Wyoming, one of the most important global central bank meetings where Federal Reserve Chairman Jerome Powell is expected to speak.

“Next week is going to be a big week … there’s always a lot of anticipation in Jackson Hole,” said Julien Lafargue, Market Strategist at Barclays Private Bank.

“Unless data comes in that says otherwise, it looks like Jackson Hole will be an opportunity for Powell to prevent a 25 basis point cut in September.”

The technology sector, which was one of the hardest hit by the recent disappointment, was poised for its longest winning streak in more than six months.

Despite the likelihood of volatility, there could be a window of opportunity for European shares as investors hesitate to increase exposure to US stocks given uncertainty about the upcoming election, Barclays’ Lafargue said.

Bayer (OTC: ) rose 9% after winning a legal victory in its battle to limit liability from claims that its Roundup killer causes cancer.

UBS gained 1.3 percent after the Swiss bank said it would liquidate a $2 billion real estate fund it acquired when it bought Credit Suisse.