FTSE 100 and European stocks rally after as ECB hikes interest rates

A look at how the major markets are performing on Thursday

Lucy Harley-McKeown
2-min read
In this article:
FILE - President of the European Central Bank, Christine Lagarde gives the laudatory speech for former German chancellor Angela Merkel, who is awarded the North Rhine Westphalian State Prize at a ceremony in Cologne, Germany, May 16, 2023. European Central Bank head Christine Lagarde said Monday June 5, 2023, that price pressures are “strong” and made clear that the bank will raise interest rates high enough to bring down inflation and keep them there “for as long as necessary.” (AP Photo/Martin Meissner, File)
President of the European Central Bank, Christine Lagarde. The ECB has raised rates by 1/4 of a percent. Photo:Martin Meissner/AP (ASSOCIATED PRESS)

European and US markets headed into the green on Thursday, as investors parsed another central bank interest rate rise.

The European Central Bank opted to hike rates once more, raising them from 4% to 4.25%. This is the ninth time it has hiked rates since July 2022. The central bank signalled it may not stop there with the possibility of another hike pencilled in for September.

The FTSE 100 (^FTSE) ticked up 0.4% by around 4pm in London, while the CAC (^FCHI) was 2% higher and Germany's DAX (^GDAXI) rose 1.6%.

The moves also come following another interest rate hike by the Federal Reserve in the US. The central bank increased its benchmark rate by a quarter point. Like the ECB, it signalled that further increases may be necessary to get inflation under control. On a brighter note bank chair Jerome Powell added that economists at the central bank no longer think that the US will enter a recession.

US markets opened in the green, with the S&P 500 (^GSPC) up 0.6%, the Dow (^DJI) rising 0.2% and the Nasdaq (^IXIC) 1% higher. The Nasdaq was supported by rallying tech stocks, with Meta (META) gaining 8% in early trade following first-half results which gave its outlook for the recently launched Threads app.

Among companies reporting, we've already seen banking giant Barclays (BARC.L) announce share buybacks and Shell's (SHEL.L) profits fall.

Read more: Shell to buyback $3bn in shares, raises dividend even as profits fall

Renault, BNP Paribas and Nestle have also reported results.

Watch: Fed is leaving all options on the table: Key takeaways from the decision

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