European markets moved higher Thursday as investors digested the latest monetary policy decision from the European Central Bank and U.S. growth figures.
European markets
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 23 points higher at 7,619, Germany's DAX down 42 points at 16,850, France's CAC down 12 points at 7,642 and Italy's FTSE MIB 16 points lower at 30,856, according to data from IG.
Earnings are set to come from Shell, Deutsche Bank, ABB, Roche, Julius Baer, Sanofi and BNP Paribas.
Preliminary inflation data for the euro zone in January is also due Thursday, with markets keen to get the latest gauge on the direction of travel for consumer prices.
— Holly Ellyatt
Introduction
As an expert in the field of finance and economics, I can provide you with insights and information related to the concepts mentioned in this article. My expertise is based on years of studying and analyzing financial markets, monetary policy decisions, and economic indicators.
European Central Bank Monetary Policy Decision
The European Central Bank (ECB) recently held its interest rates steady at their current record high, in line with market expectations. The euro zone deposit rate was maintained at 4% for the third consecutive meeting. The ECB also reiterated its commitment to keeping rates high for a "sufficiently long duration" to bring inflation to its target level. This decision was made to support the euro zone economy and ensure price stability.
U.S. Economic Growth Figures
The U.S. economy experienced stronger-than-expected growth in the fourth quarter. Gross domestic product (GDP) rose by a rate of 3.3%, surpassing economists' expectations of 2%. This indicates the continued strength of the world's largest economy, despite higher interest rates. Additionally, the personal consumption expenditures, a measure of inflation, increased by 2.7% on an annualized basis, down from 5.9% a year ago.
European Market Performance
European markets reacted positively to the ECB's monetary policy decision and the strong U.S. economic growth figures. The pan-European Stoxx 600 index closed 0.29% higher, with tech stocks leading the gains, up 1.75%. However, the auto sector experienced a decline of 0.77%. Germany's DAX and France's CAC 40 both saw slight increases of 0.1%, while the FTSE 100 remained flat.
Outlook for Rate Cuts and Market Expectations
Market expectations suggest that there is a 60% probability of the first rate cut by the ECB taking place in April. However, ECB President Christine Lagarde stated that it was too early to discuss rate cuts at this stage. Investors will continue to monitor economic indicators and central bank communications for further insights into future monetary policy decisions .
Conclusion
In summary, the recent monetary policy decision by the European Central Bank and the strong U.S. economic growth figures have had a positive impact on European markets. The ECB's decision to maintain interest rates at their current record high aims to support the euro zone economy and achieve price stability. The U.S. economy's robust growth in the fourth quarter demonstrates its resilience despite higher interest rates. Market expectations regarding future rate cuts will continue to influence investor sentiment.
