European stocks wrapped the week on a high note; Focuses on the Fed’s rate decision

European shares rounded off the week on a positive note, supported by technology, real estate and mining shares, while investors turned their attention to the US Federal Reserve ahead of long-awaited monetary easing at its meeting next week.

The pan-European STOXX 600 index was up 0.7% on the day at 515.75 points, up more than 1% for the week.

German stocks outperformed European peers with gains of around 1% as shares of Siemens Energy and SAP rose.

Consumer prices in the region’s second-largest economy rose 2.2% year-on-year in August, in line with its initial reading, after France’s CAC 40 rose 0.4%.

Auto sectors were the top gainers, jumping 1.6% to log their best day in a month.

Technology and real estate provided the biggest boost to the market, followed by miners, which rose 1.3%, as copper prices hit a two-week high ahead of Chinese holidays and amid hopes of stimulus.

After the European Central Bank (ECB) cut its deposit rate to 3.5% on Thursday, policymakers do not see an interest rate cut in October, barring a major deterioration in the outlook for growth, sources told Reuters.

Two of the ECB’s policymakers – Francois Villeroy de Galhou and Joachim Nagel – expressed confidence on Friday about the prospect of lower inflation and interest rates in the euro zone.

Investors are now betting on the size and extent of a rate cut by the US central bank next week, with money markets seeing about a 40% chance of a 50-bp cut on September 18.

“We still expect the Fed to cut 25 basis points. But we’re so far from neutral right now that a 50 basis point cut shouldn’t be seen as a sign of danger on the horizon. So in that sense, it is. It’s entirely possible that they could do it next week. will cut further,” said Jean Salerno, chief investment officer at SG Kleinwort Hambros.

Former New York Fed chief Bill Dudley said he thinks there is a strong case for a 50-bp cut.

Among other movers, heavyweight AstraZeneca fell after Deutsche Bank downgraded the stock to “sell” and cut its price target on Friday.

Worldline shares fell 14.4% to a record low after another profit warning and the announcement of the departure of its CEO.