European Shares Surge Amid Hopes of U.S. Rate Cuts

European shares closed higher, marking a strong end to the month, fueled by optimism over potential U.S. rate cuts. The banking sector led the surge, benefiting from the absence of new taxes in the UK budget. Investor sentiment improved as concerns about an AI bubble receded.

European shares ended the week on a high note, buoyed by the prospect of U.S. interest rate cuts. The STOXX 600 index rose 0.23%, marking its longest winning streak since March 2024. This optimism was mirrored in Germany and France, where exchanges also saw gains.

The banking sector was a standout performer, rising 4% over the month. Avoiding new tax hikes in the UK budget provided a lift for banks, with key strategists citing the absence of a levy as good news for the sector. Meanwhile, concerns over tech valuations led investors to pivot towards banking assets.

Similarly, the Basic Resources sector saw significant gains, with copper prices reaching new heights. Despite initial global selloffs triggered by potential AI bubbles, investor confidence was bolstered by expectations of a December rate cut. Market focus is shifting towards upcoming Russia-Ukraine peace talks.

(With inputs from agencies.)