European shares rose at the open on Thursday as investors cheered the outlook for strong US corporate earnings and dismissed threats of further interest rate hikes to fight inflation.
In the regions Stoxx 600 gained 0.4 percent, while the German Dax index rose 0.6 percent. France’s Cac 40 rose 0.7 percent. The FTSE 100 rose 0.3 percent.
Investors cheered stronger U.S. retail sales expected to boost corporate earnings that boosted prospects for the U.S. economy to avoid a recession in the first quarter.
Retail sales rose 3 percent, more than the 1.8 percent rise anticipated by economists polled by Reuters. Overnight the S&P 500 rose 0.3 percent while the Nasdaq Composite added 0.9 percent.
“The US market was strong yesterday, so that’s part of the carryover,” said Neil Shearing, group chief economist at Capital Economics. “Investors are focusing on retail and industrial data as the news is good for earnings, rather than worrying about the central bank’s response.”
US futures ticked up, with the blue-chip S&P 500 tracking contract gaining 0.08 percent, and the tech-heavy Nasdaq 100 up 0.2 percent.
But the data gave economists more confidence that major central banks will push ahead with more interest rate hikes to curb persistent inflation.
The yield on the two-year US Treasury note, which is more sensitive to interest rate changes, fell 0.04 percentage points to 4.58 percent, while the 10-year note fell 0.03 percentage points to 3.8 percent. Yields rise when bond prices fall.
The dollar index, which measures the greenback against a basket of peer currencies, fell 0.3 percent.
European Central Bank President Christine Lagarde addressed EU lawmakers on Wednesday and stressed the need for more interest rate hikes. The euro rose 0.1 percent against the dollar.
Traders are also looking forward to Thursday’s US producer price inflation figures. The headline number is expected to rise 5.5 percent in January, down from a 6.2 percent year-on-year increase in December.
Monthly output fell 0.5 percent in December, the biggest monthly decline since April 2020, prompting speculation that inflation may have stalled.
Brent crude, the international benchmark, was flat at $85.43 a barrel and WTI, the US benchmark, rose 0.2 percent to $78.7 a barrel.
Hong Kong’s Hang Seng index rose 0.8 percent, while China’s CSI 300 lost 0.7 percent.