Key Takeaways
- European shares rose on Thursday, recovering from a two-month low.
- The pan-European STOXX 600 gained 0.1% as investors awaited the ECB's decision.
- The ECB is expected to hike interest rates by 25 basis points later in the day.
European shares saw a modest recovery on Thursday, rising 0.1% to 641.23 points as of 0708 GMT, after experiencing their biggest selloff in two months. This upward movement came as investors awaited a widely anticipated interest rate hike from the European Central Bank (ECB).
Germany’s DAX index remained flat, while London’s FTSE edged 0.1% higher and France’s CAC 40 gained 0.3%. The market's recovery was seen as a response to the expectation that the ECB would deliver a 25-basis-point hike, which was expected to be announced later in the day.
The previous session saw a significant drop in European stocks, with a 1.4% decline, following a surge in Brent crude prices above $100 a barrel for the first time since July. This increase in oil prices heightened inflation concerns, leading to expectations that central banks would maintain a restrictive monetary policy for a longer period.
The ECB's decision was part of a busy period for central banks, with the US Federal Reserve and the Bank of Japan also due to announce their policy decisions in the coming week. The market's anticipation of these decisions contributed to the overall volatility seen in European shares.
Among individual stocks, Associated British Foods reported that Primark’s like-for-like sales were expected to be down 3% in its fourth-quarter period ending September 12. This news caused shares of AB Foods to fall by 8.6%, highlighting the impact of individual company performance on the broader market.
The rise in European shares was seen as a temporary rebound, with the market still grappling with the impact of rising oil prices and inflationary pressures. Analysts noted that the ECB's decision would be crucial in determining the direction of the market in the coming days.
The pan-European STOXX 600, Germany’s DAX, London’s FTSE, and France’s CAC 40 all showed mixed performances, with the DAX and FTSE remaining unchanged, while the CAC 40 saw a slight gain. The overall market sentiment was cautiously optimistic, with traders waiting for the ECB's decision to provide clearer direction.
The rise in European shares was seen as a temporary rebound, with the market still grappling with the impact of rising oil prices and inflationary pressures. Analysts noted that the ECB's decision would be crucial in determining the direction of the market in the coming days.
