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STOXX 600 down 0.3%
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Fed, SNB, Norway raise rates
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BoE rate decision next
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Tech up, banks down
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Nasdaq futures up 1%
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STOXX DOWN WITH BANKS, TECH UP (0907 GMT) As investors parsed the latest interest rate hikes in the U.S., Switzerland and Norway, just ahead a policy decision in the UK, European shares got off to a muted start on Thursday.
The STOXX Europe 600 index fell 0.3%, with renewed weakness in financials offsetting a more buoyant tech sector which rose 1%, indicating hopes the Fed is close to pausing after its ninth straight rate hike on Wednesday. Most sectors were softer and so were country indices.
(Danilo Masoni)
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EUROPE TICKS LOWER (0738 GMT)
European shares were expected to open slightly lower on Thursday after the Fed raised interest rates by an expected 25 basis points, sticking to its plan despite the transatlantic bank turmoil that has threatened financial stability. The U.S. move comes before a raft of likely hikes in Europe later in the day, with policy decisions in Norway, Switzerland and the UK due to take centre stage. The Fed's message was initially viewed as dovish, which propped up U.S. indices. But during Fed Chair Jerome Powell's news conference Wall Street turned lower. Also weighing were remarks from Treasury Secretary Janet Yellen who told lawmakers she is not considering "blanket insurance" for deposits. Reflecting the weaker U.S. close, European futures were ticking lower in early trading. Contacts on the EuroSTOXX50, DAX and FTSE 10 indices fell around 0.3%. U.S. stock index futures meanwhile rose more than 0.5%. Financials remained very much in focus. Swiss wealth manager Julius Baer , which analysts expect could gain market share following UBS's takeover of Credit Suisse, reportedly said its balance sheet was rock-solid and highly liquid.
Elsewhere in corporate news, traders were calling for declines in Zur Rose shares after the online pharmacy reported results. Jeronimo Martins was expected to rise slightly after Q4 profits the Portuguese retailer increased 23%.
(Danilo Masoni)
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EUROPE'S HIKERS LOOK TO CARRY ON AS FED HESITATES (0654 GMT) Markets reckon the Fed is pretty much done now with rate hikes, but see a different story in Europe. The European Central Bank set the tone last week by sticking with a 50 basis point hike. Today, it's over to Norges Bank, the Bank of England and the Swiss National Bank to see whether the gap that traders have priced with the Fed is warranted. Norges Bank has been steadily hiking since September 2021 and economists reckon it has at least two more 25 bp hikes to go. Markets expect another 50 bps each for the ECB and BoE , and see the SNB raising rates 50 bps to 1.5% at 0830 GMT this morning. Surprisingly hot British inflation seems to have washed out any doubt that the BoE will be in serious hiking mode today, too, with a 25 bp hike expected at 1200 GMT, its 11th consecutive rate rise. The idea that central bankers in Britain and on the continent still have work to do - despite the effect of bank stresses on financial conditions - stands in contrast to the watchful tone at the Fed. The result so far has been to send U.S. and European yields in opposite directions and to sell the dollar. Janet Yellen gave things a wobble overnight by telling Congress that she hasn't considered or discussed blanket insurance on bank deposits. But her remark that deposits at smaller banks might get a backstop if there were contagion risks went down well with community bank managers, even if it didn't with shareholders. And Asia seems to have focused on the Fed's shift - driving Treasury yields lower, the euro back to seven-week highs above $1.09 and the yen to a six-week peak, while bank shares held steady. Rhetoric from Threadneedle Street and Europe's central bankers today can test those shifts.
Key developments that could influence markets on Thursday:
Policy meetings in Norway, Switzerland and Britain
Eurozone consumer confidence, U.S. jobless claims
(Tom Westbrook)
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