European markets higher amid raft of interest rate decisions
The focus now turns to the Bank of England’s interest rate decision after the US Federal Reserve opted to pause its current rate on Wednesday in a range of 5.25%-5.50%, the highest in 22 years, as officials work to bring inflation down.
European markets and the FTSE 100 were higher on Thursday as investors awaited interest rate decisions from the Bank of England (BoE) and the Czech National Bank (CNB).
At the time of writing, France’s CAC 40 was up 1.58% to 7,042.14 points, while Germany’s DAX was up 1.33% to 15,122. 76. In London, the FTSE 100 was also in the green, up 1.22% to 7,431.69 points.
US Federal Reserve holds interest rate
The pending monetary policy announcements follow the US Federal Reserve’s (Fed) update on Wednesday night. The central bank decided to keep its current rate unchanged in a range of 5.25%-5.50%. However, it kept the door open for further action as it works to bring inflation back to the central bank's 2% target.
“The Fed funds rate was kept unchanged, with the statement repeating the line that further tightening may be appropriate,” said Matthew Ryan, head of market strategy at financial services firm Ebury. “As we had anticipated, the language on the US economy was upgraded, with ‘strong’ growth seen in the third quarter, an upgrade from the ‘solid’ expansion observed in September.”
“These hawkish remarks were interwoven with caution, and [Fed chair Jerome] Powell appeared keen for markets to not get too carried away with the possibility of additional hikes,” he added. “In particular, he highlighted the recent tightening in financial conditions and the time lag of Federal Reserve policy transmission. We think that these two factors ensure that the next move in rates will be lower, albeit the strength of the US economy and the labour market suggest that we may have to wait until the second half of 2024 for the first cut.”
Meanwhile, Norway's central bank, Norges Bank, also opted to keep its interest rate unchanged on Wednesday at 4.25%.
Bank of England rate decision pending
Investors will now be focusing on the Bank of England interest rate decision this afternoon, as well as an update from the Czech National Bank (CNB).
The Bank of England is expected to follow a similar path to the Fed and keep rates unchanged, although the decision is not expected to be unanimous with some board members at the bank expected to vote for another 25 bps hike like they did in September.
“The BoE may follow the lead from other central banks in reiterating a ‘higher-for-longer’ rhetoric which gives the Bank wiggle room to track the progress of the economy before deciding to change rates,” Daniela Hathorn, senior market analyst at Capital.com, told Euronews. “That said, it’s likely that Governor Andrew Bailey will want to appear as being more on the hawkish side to avoid a repricing in fixed-income markets, which could loosen monetary policy and be counterproductive to the goal of bringing inflation down to the 2% target.”
Company updates: Shell and Apple in focus
Meanwhile, on the corporate front, investors will also be keeping across a raft of company updates, including earnings reports from oil and gas giant Shell, as well as Apple’s latest results.
Shell said that its third quarter (Q3) profit came in at $6.2 billion (€5.8 billion), compared to $5.1 billion in Q2, which was in line with market estimates, as it benefited from higher oil prices and refining margins. However, it was a substantial drop from the $9.45 billion profit it posted a year ago.
The energy giant also announced a $3.5 billion share buyback to be carried out over the next three months.
In other earnings, BT also reported a rise of 29% in pre-tax profit for the first half, to £1.08 billion. It also said its revenue increased slightly to £10.41 billion. The interim dividend, meanwhile, was left unchanged at 2.31p.
UK food retailer Sainsbury’s also updated investors on its latest financials and said group sales were up 2.9% to £18.67 billion (€21.4 billion) for the first half. Underlying pre-tax profit was unchanged at £340 million.
Apple’s earnings will also be in focus today with the tech giant due to report its Q4 results later today. The company’s share price was up 1.87% at the end of trading in the US on Wednesday ahead of the update.
إرسال تعليق