European markets climb as less hawkish Fed soothes investors

Key Points

• The Fed on Wednesday implemented a widely expected second consecutive 75 basis point interest rate hike, as it seeks to reel in runaway inflation without tipping the slowing economy into recession.
• Barclays, Shell, EDF, TotalEnergies, Stellantis, Leonardo, Prada, Diageo and BT were among the deluge of major European companies reporting earnings before the bell on Thursday.

LONDON — European markets advanced on Thursday as global stocks took heart from slightly less hawkish messaging from the U.S. Federal Reserve.

The pan-European Stoxx 600 added 0.5% in early trade, with basic resources rising 2.8% to lead gains while food and beverages slid 0.8%.

The Fed on Wednesday implemented a widely expected second consecutive 75 basis point interest rate hike, as it seeks to reel in runaway inflation without tipping the slowing economy into recession.

Chairman Jerome Powell maintained a hawkish tone on curtailing inflation in a subsequent news conference, but the central bank dropped guidance on the scale of the next rate hike and acknowledged that “at some point” it will be appropriate to slow the pace of increases.

Shares in Asia-Pacific were mostly higher overnight, taking their lead from a broad-based rally on Wall Street following the decision, which took the Fed funds rate to its highest level since December 2018.

Following the rate hike from the Fed, DoubleLine Capital’s CEO Jeffrey Gundlach told CNBC’s “Closing Bell Overtime” he believes the central bank is no longer behind the curve on inflation and Powell has regained credibility.

U.S. stock futures were slightly lower in early premarket trade on Thursday, with shares of

dipping after disappointing quarterly results.

Earnings in focus

Earnings continue to drive individual share price movement in Europe, with a slew of major companies reporting before the bell on Thursday. They included Barclays, Shell, EDF, TotalEnergies, Stellantis, Leonardo, Prada, Diageo and BT.

 saw a 48% slump in second-quarter profit after taking a substantial provision relating to a costly trading error in the U.S. The British bank reported a £1.071 billion ($1.30 billion) net profit attributable to shareholders, meeting expectations of £1.085 billion expected by analysts, according to Refinitiv.

Barclays shares slid 0.6% in early trade.

Danish wind turbine manufacturer climbed 9% to lead the Stoxx 600, while French life insurer

fell more than 10% to the bottom of the index after swinging to a first-half loss.

On the data front, a key euro zone business climate and economic sentiment survey for July is due on Thursday, along with preliminary German inflation figures.

Source : CNBC