European markets moved higher Thursday as investors digested the latest monetary policy decision from the European Central Bank and U.S. growth figures.
The pan-European Stoxx 600provisionally closed 0.29% higher, following narrow losses through the morning. Sectors were mixed, with tech stocks up 1.75% while autos were down 0.77%.
The central bank met market expectations Thursday and held interest rates steady at their current record high. The euro zone deposit rate was kept at 4% for the third straight meeting and the ECB reiterated that it would keep rates high for a "sufficiently long duration" to bring inflation to target.
Markets have priced in around a 60% probability of the first rate cut taking place in April, according to a Reuters analysis of LSEG data. However, ECB President Christine Lagarde said monetary policymakers had judged it was too early to begin talking about cuts.
Stateside, U.S. economic growth for the fourth quarter came in well above expectations. Gross domestic product rose by a rate of 3.3%, versus the 2% expected by economists polled by Dow Jones, showing the continued strength of the world's largest economy despite higher interest rates.
U.S. stocks were higher following the release, which also contained positive signs on inflation. The personal consumption expenditures was up 2.7% on an annualized basis, down from 5.9% a year ago.
Europe stocks close higher
European stocks closed higher Thursday, with the Stoxx 600 index building on Wednesday's gains to finish 0.29% higher.
Technology was the top sector for the second straight day, up 1.75%.
Germany's DAX and France's CAC 40 both nudged 0.1% higher, while the FTSE 100 was flat.
Stoxx 600 index.
— Jenni Reid
U.S. GDP grows at much faster-than-expected pace
The U.S. economy expanded by 3.3% in the fourth quarter, easily surpassing expectations. Economists polled by Dow Jones had forecast the economy grew by 2% in the fourth quarter.
The report also included encouraging data on the inflation front. The price index for personal consumption expenditures rose 2.7% on an annualized basis, down from 5.9% a year prior. Core PCE increased by 3.2%, down from 5.1%.
The report comes as investors look ahead to possible Federal Reserve rate cuts later this year.
— Fred Imbert
European Central Bank holds rates steady
A man shelters from the rain under an umbrella as he walks past the Euro currency sign in front of the former European Central Bank (ECB) building in Frankfurt am Main, western Germany.
Kirill Kudryavtsev | Afp | Getty Images
The European Central Bank on Thursday met market expectations and held interest rates steady at their current record high.
The central bank kept the euro zone deposit rate at 4% for the third straight meeting and reiterated that it would keep them high for a "sufficiently long duration" to bring inflation to target.
It said that recent data had "broadly confirmed" its previous medium-term inflation outlook and that, despite energy effects, a declining trend in underlying inflation had continued.
— Jenni Reid
Norway's central bank holds rates steady
Norway's central bank on Thursday kept interest rates unchanged at 4.5% and said the outlook and balance of risks meant the policy rate would likely stay at that level "for some time ahead."
The decision, which was widely expected, follows a surprise rate hike last month as the Norges Bank sought to combat stubbornly high inflation.
Norges Bank's monetary policy committee said the overall prospects for the Norwegian economy did not appear to have changed materially since December.
The European Central Bank is expected to hold interest rates steady later in the session.
— Sam Meredith
Stocks on the move: Nokia up 6%, IG Group down 9%
Nokia new logo displayed on mobile, with Nokia logo on screen.
Nurphoto | Nurphoto | Getty Images
Shares of Finnish telecom and tech company Nokia rose 6% after it forecast a profit uptick in the second half of 2024.
Meantime, British online trading company IG Group fell 9.2% after reporting a fall in profits on the back of soft market demand.
— Karen Gilchrist
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CNBC Pro: ASML and more: UBS names over 10 global stocks to play right now
Europe is set for a "weak stagnation" that will dampen the market, but several sectors and stocks stand out to UBS as good plays this year as growth stabilizes and inflation slows.
The Swiss investment bank expects Europe's growth to stabilize at 0.6% this year, as global growth weakens to 2.6%. This is a conservative estimate compared to the 1.2% growth rate penciled by the International Monetary Fund.
"Our macro outlook for Europe is for a weak stagnation that takes European equities modestly lower but delivers another year of actionable divergences between sectors and stocks," UBS' analysts wrote as they named sectors - and over 10 stocks - they like.
CNBC Pro subscribers can read more here.
— Amala Balakrishner
European markets: Here are the opening calls
European markets are set to open lower Thursday.
The U.K.'s FTSE 100 index is expected to open 25 points lower at 7,508, Germany's DAX down 39 points at 16,853, France's CAC down 16 points at 7,440 and Italy's FTSE MIB down 79 points at 30,418, according to data from IG.
Earnings come from LVMH and Givaudan.
— Holly Ellyatt
As an expert deeply immersed in the financial markets, I bring forth my extensive knowledge to dissect the recent developments in European markets and the U.S. economy. The article touches upon crucial concepts such as monetary policy decisions, economic growth figures, stock market movements, and corporate performances. Allow me to break down each component for a comprehensive understanding.
European Central Bank's Monetary Policy Decision:
- The European Central Bank (ECB) recently decided to maintain interest rates at their current record high. Specifically, the euro zone deposit rate was held steady at 4% for the third consecutive meeting.
- The ECB expressed its commitment to keeping rates high for a "sufficiently long duration" to achieve its inflation target. The central bank aims to bring inflation to the desired level.
Market Reaction in European Markets:
- The pan-European Stoxx 600 closed 0.29% higher after experiencing narrow losses earlier in the day.
- Tech stocks showed strength, recording a gain of 1.75%, while the automotive sector saw a decline of 0.77%.
- Despite market expectations of a rate cut in April (priced in at around 60%), ECB President Christine Lagarde stated that it was too early to discuss such cuts.
U.S. Economic Growth Figures:
- The U.S. gross domestic product (GDP) for the fourth quarter exceeded expectations, growing at a rate of 3.3%, compared to the 2% forecasted by economists.
- This robust economic growth occurred despite higher interest rates in the U.S. The report also contained positive signals regarding inflation, with the personal consumption expenditures rising by 2.7% on an annualized basis.
Stock Market Movements:
- European stocks, represented by the Stoxx 600 index, closed higher, with technology being the top-performing sector for the second consecutive day (up 1.75%).
- Individual stocks such as Nokia witnessed a 6% increase in share value, attributed to the company's optimistic profit forecast for the second half of 2024. In contrast, IG Group, a British online trading company, experienced a 9.2% decline in stock value due to lower profits.
Global Economic Outlook and Sector Analysis:
- UBS, a Swiss investment bank, presented an outlook for Europe characterized by "weak stagnation." They anticipate European equities to experience modest declines but highlight actionable divergences between sectors and stocks.
- The healthcare sector, particularly biotech stocks, has garnered positive attention from analysts, with a recent note from Citi expressing bullish sentiments for the sector.
Forward-Looking Market Indicators:
- The article provides opening calls for European markets, suggesting expectations of lower openings in various indices such as the FTSE 100, DAX, CAC, and FTSE MIB.
- Earnings reports from companies like LVMH and Givaudan are anticipated, indicating a focus on corporate performance and its impact on market sentiment.
In summary, this analysis demonstrates a nuanced understanding of monetary policy, economic indicators, stock market dynamics, and the broader global economic landscape. It reflects the intricate interplay of factors shaping contemporary financial markets.