Europe open: Stocks jump after dovish Fed comments, oil prices retreat

(Sharecast News) - European stocks rose strongly on Tuesday morning, following a decent performance on Wall Street overnight, after two Federal Reserve policymakers made dovish remarks about interest rates. The Stoxx Europe 600 Index was up 1.2% by 0839 BST, with markets across Frankfurt, Paris, Milan and Madrid all rising between 1.1% and 1.5%. London's FTSE 100 was up 0.9%.

European stocks edged higher on Monday, though gains were limited as markets got their first reaction to the escalating conflict in the Middle Ease over the weekend.

Oil prices were retreating on Tuesday after a 4%+ jump the previous session, while Israel is continuing with airstrikes targeting Hamas on the Gaza Strip, as the war stretches into its fourth day. Brent crude was down 0.9% at $87.40 a barrel early on.

On Wall Street, markets opened cautiously on Monday but raced into positive territory after scheduled speeches from Fed vice chair Philip Jefferson and Dallas Fed president Lorie Logan, who both highlighted how the recent spike in Treasury yields may have altered their outlook since the last policy meeting. They both suggested that yields might be doing enough to keep financial conditions tight for now.

Richard Hunter, head of markets at Interactive Investor, said: "Even with the evolving situation in the Middle East, investors remained focused on the Fed's current thinking on interest rates and the need to contain inflation."

"Comments from Fed officials provided a timely boost," Hunter said, adding that elevated bond yields "would lessen the need for additional monetary tightening, which was the news investors had been waiting for. Markets adjusted the likelihood of a no-change decision at the November meeting up to almost 90% as a result, as did the December consensus which also rose to over 70%."

In terms of economic data on Tuesday, things were looking a little light, with Italian and Greek industrial output figures due, along with a speech from European Central Bank president Christine Lagarde.

However, Wednesday will be a busy one, with consumer price inflation data due out in Germany, and producer price inflation in the US, along with the minutes of the latest Fed policy meeting.

In stock movements, oil and gas groups were pulling back, tracking crude prices lower after a strong performance the previous session, with Shell, BP and TotalEnergies all in the red.

Tech stocks were performing well, with ams-Osram, Just Eat, Ocado and Delivery Hero rising strongly.