European markets closed lower amid a raft of interest rate decisions from central banks in England, Turkey, Sweden, Switzerland and Norway.
The pan-European Stoxx 600 index ended down 1.3%, with major bourses and almost all sectors in negative territory. Travel and leisure stocks saw the biggest drop, down by 3.2%, followed by mining stocks, which shed 2.6%.
European markets
The Bank of England paused its hiking cycle, keeping the policy rate at 5.25%, after cooler-than-expected inflation data. The Swedish and Norwegian central banks both opted to hike interest rates, while the Swiss National Bank paused its hiking cycle.
Global markets have also been reacting to the U.S. Federal Reserve's latest decision to hold interest rates steady. The move was widely expected but the central bank said it still expects one more hike before the end of the year and fewer cuts than previously indicated next year.
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Fed declines to hike, but points to rates staying higher for longer
Along with the rate projections, the Fed also sharply raised its economic growth expectations for this year, with U.S. gross domestic product now expected to rise 2.1% this year.
Asia-Pacific markets fell across the region overnight. U.S. stocks fell Thursday on worriesthat another Federal Reserve rate hike could come before year-end.
Europe markets close lower
European stock markets closed lower on Thursday, with major bourses and almost all sectors ending the trading session in negative territory.
It comes after a flurry of interest rate decisions from central banks, with the Bank of England and Swiss National Bank pausing their respective hiking cycles and the Swedish and Norwegian central banks opting to raise interest rates.
— Sam Meredith
Turkey’s central bank hikes interest rate to 30%
Turkey's central bank hiked its key interest rate to 30% on Thursday, a 500-basis point jump from 25%, as Ankara continues to battle double-digit inflation.
The Turkishliraweakened slightly to 27.06 against the dollar on the news, with the greenback up 0.3% against the local currency at 2:05 p.m. in Istanbul.
You can read the full story here.
—Natasha Turak
Sterling drops after Bank of England pauses rate hikes
TheBank of Englandon Thursday ended a run of 14 straight interest rate hikes after new data showed inflation is now running below expectations.
The Bank had been hiking rates consistently since December 2021 in a bid to rein in inflation, taking its main policy rate from 0.1% to a 15-year high of 5.25% in August.
TheBritish pounddropped 0.7% against the U.S. dollar shortly after the decision.
— Elliot Smith
Norway's central bank raises rates to 4.25% with December hike 'likely'
Norway's central bank opted to hike its policy rate to 4.25%, as forecast by analysts, up from 4% in the face of sticky inflation.
Norges Bank is also likely to increase rates again at the next meeting, the bank's governor said.
"Whether additional tightening will be needed depends on economic developments. There will likely be one additional policy rate hike, most probably in December," Ida Wolden Bache said in a press release.
The bank has revised its policy rate forecast since June, and now indicates the rate will be around 4.5% throughout 2024.
"There will likely be a need to maintain a tight stance for some time ahead," Bache said.
— Hannah Ward-Glenton
Stocks on the move: JD Sports up 7%, Ocado down 8%
Shares of Ocado fell 8% after Exane downgraded the online supermarket to "underperform" from neutral. The capital market company cited concerns over subdued growth in Ocado's retail business after its recent rally.
Ocado share price.
JD Sports shares were up 7% after the activewear retailer said it was on track to meet annual profit forecasts. The company said demand for Air Force 1, Adidas Gazelle and Samba footwear pushed up first-half sales.
JD Sports share price.
— Hannah Ward-Glenton
Swiss National Bank holds rates unchanged, ending hike streak
TheSwiss National Bankended its streak of five consecutive increases, keeping interest rates unchanged at its quarterly monetary policy meeting on Thursday.
The bank, which began lifting rates out of negative territory inJune 2022, held its main policy rate steady at 1.75%.
"The significant tightening of monetary policy over recent quarters is countering remaining inflationary pressure," the SNB said in a statement.
— Elliot Smith
Sweden’s central bank raises rates to 4%, in line with expectations
Sweden's central bank hiked interest rates for the eighth consecutive time on Thursday, taking the main rate to 4%, as the country continues to battle high inflation.
The quarter-point increase is in line with the expectations of analysts polled by Reuters.
The full story can be found here.
— Hannah Ward-Glenton
European markets open lower
European markets opened lower ahead of a raft of interest rate decisions from central banks in England, Turkey, Sweden, Switzerland and Norway.
The pan-European Stoxx 600 index was down 0.6% at the start of trading, with all sectors in the red. Mining stocks saw the biggest drop, down 1.6%, while travel and leisure was down 1.2%.
— Hannah Ward-Glenton
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European markets: Here are the opening calls
European markets are set to open lower Thursday.
The U.K.'s FTSE 100 index is expected to open 25 points lower at 7,508, Germany's DAX down 39 points at 16,853, France's CAC down 16 points at 7,440 and Italy's FTSE MIB down 79 points at 30,418, according to data from IG.
Earnings come from LVMH and Givaudan.
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As a financial markets expert, my in-depth knowledge in economics, central banking, and global financial markets positions me to provide a comprehensive analysis of the recent events in European markets. I've closely followed the central banks' decisions, market reactions, and underlying economic indicators, allowing me to offer valuable insights into the dynamics at play.
Let's delve into the key concepts and events mentioned in the article:
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Interest Rate Decisions:
- The Bank of England (BoE) maintained its policy rate at 5.25%, pausing its rate-hiking cycle due to cooler-than-expected inflation.
- The Swedish and Norwegian central banks opted to raise interest rates.
- The Swiss National Bank paused its hiking cycle, holding interest rates unchanged.
- Turkey's central bank hiked its key interest rate to 30% to combat double-digit inflation.
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Market Performance:
- The pan-European Stoxx 600 index ended down 1.3%, with major bourses and almost all sectors in negative territory.
- Travel and leisure stocks experienced the most significant drop, down by 3.2%, followed by a 2.6% decline in mining stocks.
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U.S. Federal Reserve's Decision:
- The U.S. Federal Reserve decided to hold interest rates steady, as widely expected.
- The central bank still anticipates one more rate hike before the end of the year and fewer cuts than previously indicated for the following year.
- The Fed raised its economic growth expectations for the current year, projecting a 2.1% rise in U.S. gross domestic product.
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Global Market Reactions:
- Asia-Pacific markets fell in response to the U.S. Federal Reserve's decision, and U.S. stocks also declined on concerns about another rate hike before year-end.
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Central Bank Actions in Detail:
- The Bank of England ended its 14-straight interest rate hikes due to lower-than-expected inflation.
- Norway's central bank raised its policy rate to 4.25%, with another hike likely in December.
- The Swiss National Bank held rates unchanged, ending its streak of five consecutive increases.
- Sweden's central bank raised interest rates for the eighth consecutive time to 4%, aligning with analysts' expectations.
- Turkey's central bank raised its key interest rate to 30% amid efforts to combat double-digit inflation.
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Stock Movements:
- Ocado's shares fell 8% after being downgraded by Exane, citing concerns over subdued growth in the retail business.
- JD Sports shares rose 7%, driven by strong first-half sales, particularly in popular footwear models.
These events collectively reflect the interconnectedness of global financial markets, the influence of central bank policies on investor sentiment, and the ongoing efforts to manage inflationary pressures. As an enthusiast in financial markets, I continue to monitor these developments to provide timely and informed analyses.