Yahoo Finance Wall Street and FTSE push higher as central banks hike interest rates
The FTSE 100 and European stocks were higher after Shell's (SHEL.L) record profits, and led by optimism after the Bank of England and the Federal Reserve said inflation might have already peaked.
The FTSE 100 (^FTSE) rose 0.54% to 7,803 points during afternoon trading, while the CAC 40 (^FCHI) in Paris jumped 1.10% to 7,154 points. In Germany, the DAX (^GDAXI) climbed 1.62% to 15,425.
The Bank of England has raised interest rates for the 10th time in a row lumping further pressure on mortgage borrowers.
Decision makers on the Bank’s Monetary Policy Committee (MPC) opted to hike the base rate from 3.5% to 4%, to help bring down double-digit inflation.
Read more: Bank of England raises interest rates to 4%
This interest rate rise will push up borrowing costs for the approximately 2.2 million people on a variable rate mortgage. More than a million households must renew their fixed-rate deals this year, and already face a jump in repayments.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "In one hand, the double-digit inflation continues taking a toll on the UK economy and on people’s lives. According to the latest data, food inflation in Britain hit the eye-watering level of 16.7% in the 4 weeks to January 22. On the other hand, the rising rates take a toll on the British housing market."
Across the pond, stocks jumped as Meta Platforms surged on rigorous cost controls, while a dovish message from Federal Reserve Chair Jerome Powell boosted bets of a softer landing for the U.S. economy..
The Dow Jones (^DJI) rose 0.11%, at the open to 34,129 points. The S&P 500 (^GSPC) gained 0.68% to 4,147 points and the tech-heavy NASDAQ (^IXIC) advanced 1.96% to 12,046.
The Federal Reserve raised short-term interest rates Wednesday by a quarter percentage point, bringing its benchmark rate to a new range of 4.50% and 4.75%, the highest level since October 2007.
The central bank acknowledged the slowdown in inflation as the Fed continues to assess the impact its interest rate hikes have had on consumer prices over the last year.
Derren Nathan, head of equity research, Hargreaves Lansdown noted: “It is rare to find ourselves in a position where rate rises are seen as good news, but this is a material slowdown following a sustained period of aggressive tightening, with rates now at levels not seen since 2007.”
“But we may not be at the end of this cycle yet,” he added.
As expected, the European Central Bank also raised its interest rate by half a percentage point to 3%. Policymakers also said they intend to increase the rate by the same amount in March.
Shell rose 2.30% after the oil giant delivered a record $39.9bn (£32.2bn) profit in 2022 and announced a new $4bn (£3.2bn) share buyback programme over the next three months.
Read more: Shell delivers record $40bn annual profit as energy prices soar
Ad firm WPP (WPP.L) climbed 3.55% after its French rival Publicis Groupe forecast more growth in 2023.
BT (BT-A.L) fell 2.62% after the broadband and mobile operator reported a 3% drop in third-quarter adjusted revenue.
Meanwhile, Brent crude (BZ=F) slipped and was trading at around $82/barrel.
In Asia, Tokyo’s Nikkei 225 (^N225) closed higher, climbing 0.20% to 27,402 points, while the Hang Seng (^HSI) in Hong Kong fell 0.50% to 21,961. The Shanghai Composite (000001.SS) finished flat at 3,285 points.
Watch: ECB hikes rates again, vows more in March
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