Stocks on the move: ING up 8%, Rational down 12%
Dutch banking and financial services company ING Group rose 8% in afternoon deals, following the launch of a share buyback plan worth 1.5 billion euros.
Meanwhile, German appliance manufacturer Rational slumped 12% after reporting its third-quarter financial results Thursday.
— Karen Gilchrist
U.S stocks open lower
U.S. stocks opened lower Thursday after the Federal Reserve delivered another interest rate hike and dashed hopes for a pivot to a softer tightening stance.
The Dow Jones Industrial Average was 0.9% lower in early deals while the S&P 500 was down 1.2%. The Nasdaq Composite also traded down 1.4%.
— Karen Gilchrist
Bank of England raises its benchmark rate by 75 basis points, its biggest hike in 33 years
Buses pass in the City of London financial district outside the Royal Exchange near the Bank of England on 2nd July 2021 in London, United Kingdom.
Mike Kemp | In Pictures | Getty Images
The Bank of England on Thursday raised interest rates by 75 basis points, its largest single hike since 1989, but struck a dovish tone as policymakers looked to temper market expectations for further aggressive monetary policy tightening.
The 75 basis point increase takes the Bank Rate to 3%, its eighth consecutive hike to the main lending rate, after the Monetary Policy Committee voted 7-2 in favor. One member voted for a 0.5 percentage point rise while one preferred a 0.25 increase.
“The majority of the Committee judges that, should the economy evolve broadly in line with the latest Monetary Policy Report projections, further increases in Bank Rate may be required for a sustainable return of inflation to target, albeit to a peak lower than priced into financial markets,” the MPC said, offering uncharacteristically specific guidance to the market.
Read the full story here.
– Elliot Smith
ECB’s Centeno says majority of rate hikes are already done
European Central Bank policymaker Mario Centeno told Portuguese newspaper Publico on Thursday that a large portion of the euro zone’s interest rate hikes have already been done.
The ECB has hiked rates by 200 basis points in total over its past three monetary policy meetings as it looks to rein in record-high inflation, which is expected to peak in the fourth quarter.
– Elliot Smith
Stocks on the move: Netcompany up 16%, RS Group down 10%
Netcompany shares soared more than 16% in early trade to lead the Stoxx 600 after the Danish IT consultancy reported strong third-quarter earnings.
At the bottom of the European blue chip index, shares of British industrial distributor RS Group fell 10% after the company’s half-year report and announcement that its CEO will take a leave of absence.
The crisis is over for the British pound, but analysts see further weakness ahead
The British pound is on firmer footing since the appointment of new Prime Minister Rishi Sunak, but Wall Street still sees further vulnerability over the next 12 months.
In a note Monday, Deutsche Bank vice president and FX strategist Shreyas Gopal said the “crisis” chapter on the U.K. can now close, with the pound now likely to trade as a “normal” currency, but noted that downward pressure from large external financing needs and low real rates remains.
Read the full story here.
– Elliot Smith
Refinitiv data shows U.S. 2-year Treasury yield briefly topping 5.1%
Refinitiv data showed that the U.S. 2-year Treasury yield briefly surpassed 5.1% during Asia’s afternoon session. It last stood at 4.6804%.
The reason for the spike was not immediately clear.
The yield on the 10-year Treasury rose during U.S. hours after Fed Chair Jerome Powell said the terminal rate will still be higher than anticipated – and last stood at 4.1448%.
The yield on the 30-year Treasury bond was also higher at 4.1908%.
Yields move inversely to prices, and 1 basis point is equal to 0.01%.
–Jihye Lee
Investors should remain cautious about unverified notes on China reopening: Credit Suisse
Investors need to “remain cautious” about unverified notes circulating on social media hinting at a potential China reopening early next year, a strategist at Credit Suisse said.
“I think, judging from different angles with a lot of news flows — especially the unverified ones, we need to remain cautious,” said Edmond Huang, Credit Suisse’s head of China securities research.
Speaking at the firm’s China Investment Conference, Huang said it’s more likely to be a measured process of reopening than an abrupt one.
“It’ll take some time especially after party congress and the formation of the new government — which means it’ll be a more gradual process than overnight, with China reopening completely to the rest of the world,” he said.
— Jihye Lee
JPMorgan Asset Management sees a smaller Fed hike in December
JPMorgan Asset Management expects the Federal Reserve to hike rates by a smaller 50 basis points in December, according to a note.
APAC Chief Market Strategist Tai Hui said the Fed could take a more moderate path in the near future.
“If core inflation does ease between now and the end of the year, the Fed could opt for a more moderate rate path and avoid putting the economy into a recession,” he said in the note.
“We do think that there are some easing in inflation on the horizon,” he said, adding that the Fed’s tightening cycle is expected to extend into the second quarter of 2023.
–Jihye Lee
CNBC Pro: Wall Street slashes price targets this earnings season. Here are 13 U.S. stocks that bucked the trend
Only a handful of companies have avoided a cut on their share price target by Wall Street banks this earnings season, a CNBC Pro analysis has revealed.
Of the nearly 300 companies in the S&P 500 that reported results in the past month, more than two-thirds – 72% – have seen their median price targets slashed or left unchanged by analysts compared to a month ago.
Only 13 stocks have emerged with a meaningfully higher price target of 5% or more and still offered a potential upside of at least 5%.
CNBC Pro subscribers can read more here.
— Ganesh Rao
Stocks fall as Powell says terminal interest rate will be higher than previously expected
In a briefing with reporters on Wednesday following a fourth consecutive 0.75 percentage point rate hike, Federal Reserve Chairman Jerome Powell said the central bank’s ultimate target for increases in interest rates has gone up.
“We still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected,” he said.
Stocks slipped following the comment, which signals that interest rates will continue to march higher and likely stay at a higher level than expected for longer as the Fed tames inflation. That reversed gains from earlier in the afternoon when traders digested the Fed statement as more dovish and hoped that rate hikes would be smaller in the future.
The Dow Jones Industrial Average was up about 60 points but pared gains. The S&P 500 also slumped from a post-rate hike spike and was up only 0.09%. The Nasdaq was slightly in the red.
—Carmen Reinicke
European markets: Here are the opening calls
European markets are looking at a positive start to trading on Wednesday as investors gear up for the latest monetary policy decision from the U.S. Federal Reserve.
Many analysts expect the meeting will result in a 75 basis point interest rate hike. Investors will also monitor the central bank’s statement and Fed Chair Jerome Powell’s press conference for signs of a slowing the tightening pace.
London’s FTSE index is expected to open 21 points higher at 7,115, Germany’s DAX up 84 points at 13,422, France’s CAC up 36 points at 6,364 and Italy’s FTSE MIB up 119 points at 22,771, according to data from IG.
Earnings will come from Next, Aston Martin Lagonda, GSK, Metro and Maersk. German unemployment data for October will also be released.
— Holly Ellyatt
