European Equities Surged to fresh records on Friday as increased hopes of more stimulus from the top central banks and a weaker Euro lifted stocks in the major indexes.
The dollar strengthened against the Euro on Friday on comparatively better government debt Yields.
“A period of weak U.S. data, a strong dollar—none of this currently seems to bother the [Fed] and distract it from its planned normalization of U.S. monetary policy. This is clearly what the market gathered from the last [Fed] minutes,” Commerzbank currency strategist Thu Lan Nguyen, told the Wall Street Journal.
The strongest weekly rally in three months propelled the benchmark Stoxx Europe 600 Index 0.9% to an all time high for the second straight session. A recent series of corporate mergers has injected fresh optimism into an already bullish market.
The European benchmark index surpassed a record 2000 recorded on Thursday after government data from Germany showed a record rise in the country’s industrial output. The record industrial output growth fuelled optimism that the Euro zone’s economy was improving.
The European benchmark is now more than 21% high on the year boosted by plans by the European Central bank to commence a quantitative easing program.
Also contributing to the rally was news that Greece had paid back its latest debt installment to the International Money Fund to ease worries that the country would spark a new debt repayment confrontation with its creditors.
“This year will be Europe’s answer to what U.S. equities gave us in 2013,” Peter Garnry, Saxo Bank A/S’s head of equity strategy, told Bloomberg by phone from Hellerup, Denmark.
“Companies are facing extremely cheap financing rates, the lowest euro in a decade, low oil prices, QE and an improving economy. If all these positive factors can’t get Europe back on track, then nothing will.”
An unprecedented 14 of the zone’s 17 markets advanced on Friday with the benchmark indices in Germany and Norway posting the biggest advances at more than 1.7%, Portugal’s benchmark PSI 20 Index was the most dismal performer with a 3% decline on the day.
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