European markets close higher after ECB rate hike; Stoxx 600 up 0.5%

U.S. stocks opened lower Thursday as Wall Street braced for more large rate hikes following the ECB's increase.

The Dow Jones Industrial Average was down 1% while the S&P 500 and the Nasdaq were both 0.8% lower.

— Karen Gilchrist

The European Central Bank on Thursday announced a 75 basis point interest rate rise, taking its benchmark deposit rate to 0.75%.

"This major step frontloads the transition from the prevailing highly accommodative level of policy rates towards levels that will ensure the timely return of inflation to the ECB's 2% medium-term target," it said in a statement.

It added it "expects to raise interest rates further, because inflation remains far too high and is likely to stay above target for an extended period."

Read the whole story here: European Central Bank raises rates by 75 basis points to tackle soaring inflation

— Jenni Reid

U.K. Prime Minister Liz Truss announced a stimulus package to help Brits with soaring energy bills.

Truss said the typical household "will pay no more than £2,500 ($2,880) per year for each of the next two years," which the prime minister added will give the average household "a £1,000 saving per year."

Before the announcement, energy bills for Brits were set to hit £3,549 per year from Oct. 1, up from £1,971.

The stimulus package comes as more than 180,000 people in the U.K. have pledged to cancel their energy bills payments on Oct.1 in protest of increased energy prices.

— Hannah Ward-Glenton

The euro moved higher against the U.S. dollar and British pound as investors await the ECB's rate hike announcement.

The euro was trading up 0.1% at $1.0015 at around midday in London. On Monday, the shared currency dipped below 99 cents for the first time in 20 years on energy security fears.

The euro was 0.1% higher against sterling, which suffered from Bank of England growth warnings Wednesday and the announcement of a multi-billion pound energy support package.

— Jenni Reid

The British pound fell against the dollar and euro Thursday morning as new prime minister Liz Truss prepared to announce a huge package of support to help with higher energy bills.

Sterling was down 0.4% against the dollar at $1.1480 at 9:30 a.m. London time. At one point yesterday, the U.K. currency dropped to $1.1407, its lowest level since 1985.

Questions over the support package's impact on U.K. growth and net debt have combined with ongoing dollar strength amid market volatility.

The euro was up 0.24% against the pound at 0.8639 ahead of the ECB announcement, but down 0.17% against the dollar at 0.9986.

— Jenni Reid

Most sectors were trading higher early Thursday, as energy security continued to dominate headlines and investors await a decision on rate hikes by the European Central Bank.

Only retail stocks saw a significant fall in early trade, losing 1.67%. Oil & gas businesses were up 0.14% after leading Wednesday losses.

British biotech firm Genus was the biggest gainer, up 7.9%, after posting higher profits in full-year results.

At the other end of the scale, French IT firm and consultancy Atos dropped 12.75%.

— Jenni Reid

The European Central Bank is expected to frontload a series of rate hikes and sacrifice growth in the region due to the rising cost of living which is threatening to surge even higher. 

ECB Executive Board Member Isabel Schnabel's speech in Jackson Hole set the tone for the upcoming policy meeting this week. With inflation in the euro zone projected to rise to at least 10% in the coming months and the risk of consumer prices rocketing higher, a "jumbo" rate hike of 75 basis points on Thursday is certainly a possibility.

"As frontloaded hikes can have a bigger impact on inflation expectations than a more gradual approach, a 75bp move could make sense," said ECB watcher and Berenberg's Chief Economist Holger Schmieding in a research note. 

Read the whole story here: European Central Bank could unleash a jumbo rate hike as the economy slides toward recession

— Holly Ellyatt

The U.S. dollar has room to inch up even higher thanks to rate differentials on the back of a hawkish Federal Reserve, according to Wells Fargo Securities FX strategist Brendan McKenna.

"We think a lot of these international banks will not be able to raise rates as aggressively as the markets are priced in for," he told CNBC's "Squawk Box Asia."

"So it's kind of a combination of a more hawkish Fed and a less hawkish tightening cycle from these international central banks that support the dollar over the remainder of this year," he said.

–Jihye Lee

Goldman Sachs revised its forecasts for upcoming Federal Reserve rate decisions year.

Analysts led by chief economist Jan Hatzius said in a note that the firm expects a 75-basis-point hike in September, up from a previous forecast of 50 basis points, as well as a 50-basis-point hike in November, also revised from a previous projection of 25 basis points.

It also expects a 25 basis point hike in December — citing officials' recent hawkish commentary.

The note said Fed officials "have seemed to imply that progress toward taming inflation has not been as uniform or as rapid as they would like," the note said.

–Jihye Lee

Market volatility is here to stay, according to market veteran Phil Blancato.

But the president and CEO of Ladenburg Thalmann Asset Management sees a "strong rally" on the cards as market conditions improve.

He predicts when the rally will be, and names his top picks to trade the volatility.

Pro subscribers can read more here.

— Zavier Ong

Stocks rallied Wednesday as Wall Street looked past concerns about aggressive rate hikes coming from the Federal Reserve.

The Dow Jones Industrial Average gained 435.98 points, or 1.40%, to end the day at 31,581.28. The S&P 500 rose 1.83% to 3,979.90 and the Nasdaq Composite ticked up 2.14% to 11,791.90, breaking a seven-day losing streak.

—Carmen Reinicke

European markets are expected to open in mixed territory Monday.

The U.K.'s FTSE 100 index is expected to open 15 points lower at 8,422, Germany's DAX up 23 points at 18,781, France's CAC 8 points higher at 8,201 and Italy's FTSE MIB up 15 points at 34,332, according to data from IG.

Earnings are due from Ferrovial. There are no major data releases.

— Holly Ellyatt