European shares hit a nine-month high on Wednesday after Federal Reserve Chair Jerome Powell delivered a positive economic outlook for 2023. The Stoxx 600 was up 0.8% following the address, thereby reaching its highest level since April 2022.
Powell remarked that 2023 should see a significant decline in inflation, however, he did warn that the battle against inflation would take some time after the U.S. jobs report released last Friday showed high employment levels.
Susannah Streeter, markets analyst at Hargreaves Lansdown, feels that investors are viewing Powell’s remarks with blinders on. “Right now, investors appear to be focusing more on Powell acknowledging disinflationary forces taking hold, rather than his concern about latest jobs reading. I still think there is underlying worry about just how far rates will have to go.”
Oil and gas led the stock rally with overall gains of 2%, spurred by a 10% surge by Nestle and a 6% uptick from Equinor following both companies’ positive earnings reports. Denmark’s benchmark OMX Copenhagen index rallied to a record high, driven by a 9% spike by jewelry maker Pandora following a strong fourth quarter showing.