European markets mostly rose Thursday after U.S. Federal Reserve Chair Jerome Powell said smaller interest rate hikes could begin in December.
The pan-European Stoxx 600 gained 0.76% and notched a six-month high. Tech stocks advanced, while oil and gas names struggled.
Speaking at an event Wednesday, Powell said he expects the central bank will be in a position to reduce the size of rate hikes as soon as next month. However, he warned that monetary policy is likely to stay restrictive for some time until real signs of progress on inflation emerge.
Global markets have also been buoyed in recent days by China's slight easing of Covid-19 lockdown measures. On Wall Street, the S&P 500 and Nasdaq Composite both rose slightly after inflation data, closely watched by the Federal Reserve, came in cooler than expected.
European stocks close mostly higher
The Stoxx 600 index, which tracks a broad swath of stocks in Europe, rose 0.76% to reach its highest level in six months. Here's how other European stock indexes in fared:
- FTSE 100: Down 0.2%
- German Dax: up 0.48%
- French CAC 40: up 0.23%
- Italy's FTSE MIB: up 0.16%
- Spain's Ibex 35: up 0.52%
— Fred Imbert
Stocks on the move: Bridgepoint up 8%, Investec down 7%
Shares of British private equity firm Bridgepoint Group were up 8.4% by mid-afternoon to lead the Stoxx 600, while at the bottom of the index, Anglo-South African wealth manager Investec fell 7%.
- Elliot Smith
British factory activity decline slows in November, but outlook darkens
The S&P Global/CIPS manufacturing PMI (purchasing managers' index) edged up to 46.5 in November from a two-and-a-half-year low of 46.2 in October, remaining well below the 50 mark separating expansion from contraction.
S&P Global said said weak demand, declining export sales, high energy prices and component shortages all weighed heavily on the industry.
"The outlook for the sector also darkened, as confidence among manufacturers fell to its lowest level since April 2020," said Rob Dobson, director at S&P Global Market Intelligence.
"Weak sentiment and declining intakes of new work led to job losses, a retrenchment in purchasing activity and an accumulation of finished goods inventory that will likely provide a further brake to output during the months ahead."
- Elliot Smith
Euro zone factory activity downturn slows in November
S&P Global's final manufacturing PMI (purchasing managers' index) for the euro zone rose to 47.1 in November from 46.4 in October, slightly below a preliminary reading of 47.3 and beneath the 50 mark separating contraction from expansion.
"The PMI signals some welcome moderation in the intensity of the eurozone manufacturing downturn in November, which will support hopes that the region may not be facing a winter downturn as severe as previously anticipated by many," said S&P Global Chief Business Economist Chris Williamson.
However, Williamson noted that the survey's production index continues to run at one of the lowest levels recorded over the past decade.
"At these levels the survey is indicative of a marked annualised rate of contraction of approximately 4%," he said.
"While official manufacturing data have been more buoyant – and more volatile – in recent months, such weak PMI readings have always been followed by commensurate steep declines in the official statistics."
- Elliot Smith
Stocks on the move: Ocado up 8%, UCB down 5%
At the bottom of the European blue chip index, Belgian biopharmaceutical company UCB fell more than 5% after JPMorgan cut its target price for the stock.
- Elliot Smith
German October retail sales well below forecasts
German retail sales contracted by 5% year-on-year and 2.8% for the month in October, the federal statistics office said Thursday, well below a Reuters consensus forecast of a 2.8% annual and 0.6% monthly decline.
- Elliot Smith
CNBC Pro: Forget Amazon. Here’s what top tech investor Paul Meeks is buying
Investor confidence in the tech sector has been shaken this year amid a flight to safety, but top tech investor Paul Meeks said he is now "more bullish" on the sector than in recent months, though he remains selective within the sector.
He tells CNBC the stocks he favors.
Pro subscribers can read more here.
— Zavier Ong
CNBC Pro: UBS reveals 15 global stocks sensitive to China's reopening plans
Chinese stocks have risen this week after the nation's health authorities reported a recent uptick in vaccination rates, which experts regard as crucial to reopening the country.
The impact of Beijing's change in tack toward dealing with the outbreak of Covid-19 is being felt not only in China but also around the world.
The Swiss bank UBS has identified 15 stocks in the MSCI Europe index that will outperform "in an environment where China's growth rebounds and the country reopens its borders."
— Ganesh Rao
Powell continues to believe in a path to a soft-ish landing
Federal Reserve Chair Jerome Powell says he continues to believe in a path to a "soft-ish" landing — even if the path has narrowed over the past year.
"I would like to continue to believe that there's a path to a soft or soft-ish landing" Powell said at the Brookings Institution.
"Our job is to try to achieve that, and I think it's still achievable," Powell said. "If you look at the history, it's not a likely outcome, but I would just say this is a different set of circumstances."
— Sarah Min
Powell says Fed can "moderate the pace" of future rate increases due to lagged effect of past hikes
Federal Reserve chairman Jerome Powell told an audience at the Brookings Institution Wednesday that the central bank can afford to ease back on its tighter monetary policy at its December meeting (due to wrap up Dec. 14).
The lagged effect of higher rates already taken in 2022, plus the drawing down of the size of the Fed's balance sheet through quantitative tightening, mean "it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down," Powell said.
"The time for moderating the pace of rate increases may come as soon as the December meeting," said the 69-year-old Fed chair.
In response to Powell's remarks, the S&P 500 quickly gained to about 3970 vs about 3950 before the address.
— Scott Schnipper, Jeff Cox
European markets: Here are the opening calls
European markets are heading for a higher open Thursday as markets react positively to the U.S. Federal Reserve's quarter-point rate hike.
The U.K.'s FTSE 100 index is expected to open 31 points higher at 7,788, Germany's DAX 101 points higher at 15,273, France's CAC up 35 points at 7,109 and Italy's FTSE MIB up 121 points at 26,870, according to data from IG.
On Thursday, investors in Europe will be focused on the latest monetary policy decisions from the European Central Bank and Bank of England.
It's a busy day for earnings with Shell, BT Group, Deutsche Bank, Banco Santander, ABB, Julius Baer and Roche reporting.
— Holly Ellyatt