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European stocks surge higher; Shell gains on buyback, BOE in spotlight

Published Nov 02, 2023 15:12 Updated Nov 02, 2023 16:48
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Investing.com - European stock markets traded higher Thursday, following strong gains on Wall Street on rising hopes that the Federal Reserve has completed its run of interest rate hikes.

At 04:40 ET (08:40 GMT), the DAX index in Germany traded 1.2% higher and the CAC 40 in France climbed 1.4% and the FTSE 100 in the U.K. rose 1.1%.

Sentiment buoyed by Powell’s comments

European equities have followed the positive lead from Wall Street, with the tech-heavy Nasdaq Composite closing 1.6% higher, after investors became increasingly confident the next move in U.S. interest rates will be down, not up in the wake of the latest policy-setting meeting from the U.S. Federal Reserve.

The Fed kept rates steady on Wednesday, as widely expected, and while Chair Jerome Powell maintained the option of another hike, his comments suggested he was less than committed to the idea. 

Risks were now "more two sided" and almost "balanced", he said in his press conference, and expectations of inflation "were in a good place". 

Shell (LON:SHEL) lifts its share buybacks, maintains dividend

Back in Europe, the earnings season continued, with Shell stock rising 1.2% after the oil major announced share buybacks of $3.5 billion over the next three months, up from $2.7 billion in the previous three months, and maintained its dividend even while reporting a sharp annual drop in third-quarter profit to $6.2 billion as energy prices cooled.

Lufthansa (ETR:LHAG) stock rose 6.5% after the German carrier reported quarterly profits slightly above expectations on the back of robust travel demand this summer, stating that bookings remained strong ahead of the busy Christmas holiday season.

On the flip side, Zalando (ETR:ZALG) stock fell 1.3% after Europe's biggest online fashion retailer reported weaker than expected third-quarter revenue, and saw continued pressure on demand for the rest of the year, expecting 2023 sales to decline.

ING (AS:INGA) stock fell 4.6% after the Dutch bank warned of slowing global economic growth even as it announced its second share buyback program of the year, following third-quarter net profits that more than doubled from the previous year.

That said, the corporate highlight of the day is likely to come from the U.S., as Apple (NASDAQ:AAPL), the world’s biggest company by market capitalization, is due to release its latest earnings after the market closes.

Bank of England seen holding steady

Back in Europe, it’s the turn of the Bank of England to announce its latest monetary policy decision later in the session.

This central bank is widely expected to follow the European Central Bank and the Fed in keeping interest rates unchanged at their 15-year high this month, but it still has to battle an inflation rate that came in at 6.7% in September, more than three times its target.

The European data slate includes German unemployment data for October, as well as manufacturing PMI numbers for many European countries and the eurozone as a whole.

Crude snaps three-day fall after Fed decision

Oil prices rebounded Thursday, snapping a three-day decline, after the Fed kept interest rates on hold, hitting the dollar and helping risk appetite return to financial markets.

By 04:40 ET, the U.S. crude futures traded 1.5% higher at $81.63 a barrel, while the Brent contract climbed 1.3% to $85.72 a barrel. Both benchmarks settled at their multi-weeks lows in the previous session, having dropped around 10% in October.

Markets largely traded past U.S. inventory data, with official data from the Energy Information Administration showing a slightly smaller-than-expected build in oil inventories over the week to October 27.

Distillate inventories saw a smaller-than-expected decline, while gasoline inventories saw an unexpected, albeit limited build. 

Additionally, gold futures rose 0.4% to $1,995.55/oz, while EUR/USD traded 0.3% higher at 1.0605.

 

European stocks surge higher; Shell gains on buyback, BOE in spotlight
 

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