Stocks mostly rise after more central bank rate hikes / Photo: © AFP
Stocks mostly rise after more central bank rate hikes
European and US stock markets mostly rose on Thursday after the European Central Bank and Bank of England raised interest rates, joining the US Federal Reserve in moving once again to cool sky-high inflation.
Gains by equities in London, Frankfurt and Paris accelerated after the ECB and BoE each announced half-percentage-point rate hikes, steeper than the Fed's increase.
The central bank said another such increase would come in March, saying it would "stay the course in raising interest rates significantly at a steady pace".
Matthew Weller, global head of Research at FOREX.com and City Index, called it a "decisive step to combat inflation and promote stability in the eurozone."
"This move was widely anticipated by market analysts and reflects the improving economic conditions in the region," he said.
Signs are growing the eurozone may have passed the worst of an economic shock, with inflation slowing from a peak in October and the single currency area eking out growth at the end of 2022.
The half-point increase on Thursday and December follow two jumbo-sized hikes of three-quarters of a percentage point.
Earlier on Thursday the Bank of England also hiked its interest rate by half a percentage point, marking the 10th increase in the key rate.
The central bank forecast a shallower-than-expected UK recession this year as the country faces a cost-of-living crisis.
But BoE governor Andrew Bailey said inflationary pressure was still there and it was "too soon to declare victory yet".
Analysts at ING said that "ultimately, a recession is still likely –- albeit milder than first anticipated."
The euro and pound both fell around one percent against the dollar.
- Fed hopes -
In Asia the main equity indices closed mixed ahead of the European rate decisions, with investors unable to maintain an early rally -- despite a strong lead Wednesday from Wall Street fuelled by hopes the Fed's campaign of interest rate hikes could be nearing an end.
Equities were also boosted by well-received earnings, including a record annual profit of $42.3 billion for British energy giant Shell, and sales dropping less than expected at Meta, owner of Facebook and Instagram.
Wall Street opened higher on Thursday, with the tech-heavy Nasdaq jumping more than two percent as shares in Meta surged 20 percent. But the Dow later turned lower.
Tech firms had led a surge on the Nasdaq and S&P 500 indices Wednesday after the US central bank unveiled a slower quarter-point increase in borrowing costs -- and also noted progress in bringing prices under control.
The decision to lift rates by the smallest amount in almost a year came after a series of data points suggested the world's top economy was slowing down, with US inflation at its lowest level since October 2021.
"Overall, the capital markets behaved as if they are confident in the idea that the Fed will be pausing its rate hikes soon and that a rate cut before the end of the year is not out of the question," said market analyst Patrick O'Hare at Briefing.com.
- Key figures around 1515 GMT -
London - FTSE 100: UP 0.4 percent at 7,799.09 points
Frankfurt - DAX: UP 1.5 percent at 15,406.19
Paris - CAC 40: UP 0.8 percent at 7,133.15
EURO STOXX 50: UP 1.1 percent at 4,216.96
New York - Dow: DOWN 0.8 percent at 33,833.02
Tokyo - Nikkei 225: UP 0.2 percent at 27,402.05 (close)
Hong Kong - Hang Seng Index: DOWN 0.5 percent at 21,958.36 (close)
Shanghai - Composite: FLAT at 3,285.67 (close)
Euro/dollar: DOWN at $1.0899 from $1.0995 on Wednesday
Pound/dollar: DOWN at $1.2241 from $1.2378
Euro/pound: UP at 88.95 pence from 88.76 pence
Dollar/yen: DOWN at 128.83 yen from 128.90 yen
West Texas Intermediate: DOWN 1.4 percent at $75.35 per barrel
Brent North Sea crude: DOWN 1.4 percent at $81.65 per barrel
burs-rl/lth
(M.Dorokhin--DTZ)
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