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EU markets hit seven-week high as investors digest Fed interest rate hike

European markets hit a seven-week high on Thursday morning as concerns were eased about the pace of rate hikes by the US Federal Reserve going forward and boosted by a clutch of strong earnings reports.

The pan-European STOXX 600 index rose 0.48%. The DAX was 0.12% higher in early trade on Thursday, the CAC 40 gained 0.10%, but the FTSE 100 fell by 0.47%.

Investors have been worried this year that aggressive central bank rate hikes could tip economies into recession.

 

Fed hiked interest rates by another 75 bps

The Federal Reserve hiked interest rates on Wednesday by 75 basis points for the second consecutive time in an attempt to fight surging inflation.

The Fed’s benchmark rate is now between 2.25%-2.5%. Markets largely expected this move as the Fed telegraphed the increase in a series of statements since the June meeting.

“As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation,” Fed Chair, Jerome Powell said.

Powell did not specify whether another rate hike will follow in September and noted that everything will highly depend on the data.

 

Oil extends gains amid low crude inventories data and a rebound in gasoline demand in the US

Oil prices extended gains from the previous session on Thursday morning boosted by improved risk appetite among investors as low crude inventories and a rebound in gasoline in the US supported prices.

Oil rose by more than $1. Brent Crude futures were 1.36% higher and valued at $103.07 a barrel while West Texas Intermediate (WTI) futures grew by 1.30% and were valued at $98.53 a barrel.

US crude oil stockpiles fell by 4.5 million barrels last week, against expectations of a 1 million-barrel drop, while US gasoline demand rebounded by 8.5% week on week, EIA data showed.

Crude exports reached a record of 4.5 million barrels per day as WTI traded at a steep discount to Brent.

 

Gold futures higher

Gold futures edged higher on Thursday morning, rising by 1.37% and costing $1,736.20/oz.

Silver futures also followed the positive trend, up by 4.34%, platinum futures were 1.22% higher and palladium futures grew by 4.10%.

 

Barclays sees first profit slumps

The British bank, Barclays, reported that its first half profit fell more than expected due to a huge £1.9 billion hit for regulatory misteps mostly from covering the costs of having to buy back billions of dollars worth of securities it sold by mistake.

The bank’s profits before tax amounted to £3.7 billion (around $4.5 billion) for the six months of the year, down from £4.9 billion in the same period one year ago and just missing the analyst forecast of £3.9 billion.

Barclays’ results were affected by a £1.3 billion pound charge in the half to cover the costs of buying back $17.6 billion worth of securities it sold in breach of US regulations in an error.

Barclays shares (BARC) dipped by around 2% in early trade following the news.

 

Shell sees $11.5 bn profit

The British multinational oil and gas company, Shell, reported a second quarter profit of $11.5 billion, smashing its previous record just three months earlier.

The firm also announced a share buyback programme of $6 billion for the current quarter, but did not raise its dividend of 25 cents per share.

Shell’s rival, TotalEnergies, also reported a record profit of $9.8 billion in the quarter and accelerated its buyback programme. Norway’s Equinor raised its special dividend and boosted share buybacks on Wednesday after its second quarter profit of $17.6 billion surpassed expectations.

Shell shares (SHEL) were 1.20% higher in early trade on Thursday following the news.

 

META misses earnings revenue

Meta, the parent company of Facebook, reported a lower-than-expected drop in revenue, missed on earnings and issued a weak forecast, pointing to a second consecutive decline in year over year sales.

The company reported $2.46 per share vs the expected $2.59 per share. Revenue was $28.82 billion vs the expected $28.94 billion.

Meta shares declines by nearly 50% since the beginning of the year, as the company’s core online advertising business was hurt by Apple’s iOS privacy update last year, limiting the company’s ability to track users. In addition, weakening economy has also forced many users to slash their budgets.

The firm expects its revenue in the third quarter to range between $26 billion and $28.5 billion which amounts to a projected decline of between 2 and 11% from one year ago.

In a call with analysts, Mark Zuckerberg, the company’s CEO, said that Meta would be reducing its headcount over the next year as it tightens its belt for the economic slowdown.

Meta’s rivals, Snap and Twitter also posted poor reports in the second quarter citing economic and mobile platform challenges that have permeated the online ad market.

Meta shares (META) fell by 5.22% in pre-market trade.

 

Diageo sales top forecast

The maker of Johnnie Walker whiskey, Diageo, beat annual sales forecasts on Thursday as more people drank expensive spirits and bars reopened after pandemic lockdowns.

The world’s largest spirit maker said its net sales jumped 21.4% to £15.5 billion (around $18.9 billion) in the year to 30 June, beating the analyst estimate of 16.1%.

Diageo shares (DGE) were 0.58% higher in early trade on Thursday.

 

Top cryptocurrencies bullish as BTC stays above $23,000 levels

Top cryptocurrencies were bullish on Thursday morning as bitcoin (BTC) rose back to $22,000 levels and was even nearing $23,000 territory.

Ethereum (ETH) was 0.04% higher in the past 24 hours. BNB rose by 0.21%, Cardano (ADA) gained 0.10% and Solana (SOL) rose by 0.54%.

The popular Elon Musk-endorsed memetoken Dogecoin (DOGE) was 011% higher.

Note, cryptocurrency CFD trading is restricted in the UK for all retail clients.

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