Hannah Ward-Glenton and Holly Ellyatt
European stocks were over 1% lower shortly after the open Thursday, as investors digested news from the U.S. Federal Reserve and Swiss central bank, as both opted to hike rates.
The Fed implemented a third consecutive 0.75 percentage point rate hike yesterday, with policymakers pledging to continue raising rates as high as 4.6% in 2023 before pulling back in the fight against inflation.
Meanwhile, the Swiss National Bank on Thursday raised its benchmark interest rate to0.5%, a shift that brings an end to an era of negative rates in Europe.
The pan-European Stoxx 600 was down 1.04% at 8:40 a.m. London time. Technology stocks and travel and leisure led the market downturn, both slumping around 2%, with almost all sectors and major bourses in the red at the start of trading.
U.S. stock futures fell on Wednesday night following a volatile session for the major averages stateside while overnight in Asia, markets also traded lower.
In Europe, attention will now turn to the Bank of England, which is also expected to hike rates today.
Earnings come from Manchester United football club and data releases include consumer confidence figures for the euro zone in September.
Market open: Fortum up 4%, Accor down 6%
Shares of Fortum rose again in early trade Thursday after the Finnish company agreed to sell its 56% stake in German utility Uniper to the German government. The state-owned energy company shifted its stake in a nationalization deal.
French hospitality company Accor saw its shares fall 6.3% at market open after JP Morgan cut its rating on the stock from neutral to underweight. The investment bank expressed concerns the group would not be able to return to its previous level of profitability, saying “our concerns have now exceeded the reasons we like it.”
— Hannah Ward-Glenton
Credit Suisse plans to split its investment bank into three: The FT
Credit Suisse has plans to split its investment bank into three, according to the Financial Times.
The Swiss lender wants to have a separate “bad bank” exclusively for risky assets as it recovers from several years’ worth of scandals and blunders.
New proposals suggest Credit Suisse will sell some of its profitable units as part of the radical reshuffle, with full plans expected to be announced at the bank’s third-quarter results on Oct. 27, the FT reported.
— Hannah Ward-Glenton
Oil prices climb after Fed’s rate hikes, demand fears linger
Oil prices climbed following the Fed’s third consecutive rate hike.
Reuters also reported Chinese refiners are expecting the nation to release up to 15 million tonnes worth of oil products export quotas for the rest of the year, citing people with knowledge of the matter.
Brent crude futures rose 0.45% to stand at $90.24 per barrel, while U.S. West Texas Intermediate also gained 0.45% to $83.3 per barrel.
— Lee Ying Shan
Fed hike likely to keep Asian risk assets under pressure, JPMorgan says
Asian risk assets, especially export-oriented companies, will remain under pressure in the short term following the Fed’s rate hike, according to Tai Hui, chief APAC market strategist at JPMorgan Asset Management.
Tai added that a strong U.S. dollar is likely to persist, but tightening monetary policy in most Asian central banks — with the exception of China and Japan — should help limit the extent of Asian currency depreciation.
The U.S. dollar index, which tracks the greenback against a basket of its peers, strengthened sharply and last stood at 111.697.
— Abigail Ng
CNBC Pro: This fund manager is beating the market. Here’s what he’s betting against
Stock markets are down but the fund managed by Patrick Armstrong at Plurimi Wealth is continuing to deliver positive returns. The fund manager has a number of short positions to play the market volatility.
— Zavier Ong
CNBC Pro: Morgan Stanley’s Mike Wilson names the key attribute he likes in stocks
Morgan Stanley’s Mike Wilson is staying defensive amid the persistent market volatility this year. He names the key attribute he’s looking for in stocks.
Stocks with this attribute have been “rewarded” this year, with the trend likely to persist until the market turns more bullish, according to Wilson.
— Zavier Ong
European markets: Here are the opening calls
European stocks are expected to open in negative territory on Wednesday as investors react to the latest U.S. inflation data.
The U.K.’s FTSE index is expected to open 47 points lower at 7,341, Germany’s DAX 86 points lower at 13,106, France’s CAC 40 down 28 points and Italy’s FTSE MIB 132 points lower at 22,010, according to data from IG.
Global markets have pulled back following a higher-than-expected U.S. consumer price index report for August which showed prices rose by 0.1% for the month and 8.3% annually in August, the Bureau of Labor Statistics reported Tuesday, defying economist expectations that headline inflation would fall 0.1% month-on-month.
Core CPI, which excludes volatile food and energy costs, climbed 0.6% from July and 6.3% from August 2021.
U.K. inflation figures for August are due and euro zone industrial production for July will be published.
— Holly Ellyatt
Source : CNBC