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As markets are still speculating that Wednesday’s interest rate hike by the Federal Reserve was the last in the current cycle, the European Central Bank (ECB) is expected to follow suit today. Meanwhile, Meta Platforms provided one of the bright spots in a packed corporate earnings calendar.
Federal Reserve Chair Jerome Powell remained uncertain about whether there will be another policy rate increase this year, and Fed staff are no longer predicting a recession. However, futures markets still suggest a less than 50% probability of another rate move.
Treasury yields and the dollar (DXY) eased overnight.
The Commerce Department’s report on gross domestic product (GDP), due on Thursday, is anticipated to show that the U.S. economy grew at a trend rate of 1.8% in the second quarter, with core inflation dropping by almost a full point to 4%, and the housing slump approaching an end.
The stock market remains buoyed near year-highs.
Boosted by positive Boeing results, the Dow Jones blue chip index (DJI) recorded 13 consecutive daily gains on Wednesday for the first time since 1987, and S&P500 futures are rising again ahead of today’s opening bell. The VIX (volatility gauge) slipped below 13 for the first time this month.
Overnight, Meta Platforms stole the spotlight, with its stock surging 7% after reporting strong growth in advertising revenue, surpassing Wall Street’s financial targets, and providing third-quarter revenue guidance.
Global stocks (MIWD00000PUS) reached their highest level since April last year on Thursday, with European stocks up more than 1% ahead of the ECB decision.
The ECB is also expected to implement a quarter-point hike to 3.75%, but money markets doubt there will be another rate increase in the campaign. There are concerns about the euro zone economy slipping in and out of recession this year as disinflation progresses.
The euro gained ground against a weaker dollar ahead of the announcement and press conference from ECB chief Christine Lagarde. The yen also strengthened as the Bank of Japan is anticipated to maintain its easy policy unchanged on Friday.
In other news, earnings reports have dominated the headlines.
Shares in oil giants Shell and TotalEnergies fell after both companies missed forecasts, reporting significant profit drops for the second quarter due to the sharp oil price recoil over the last year.
Barclays saw a 7% decline in its shares despite plans for a substantial buyback. The British lender warned of growing pressure on its UK business and missed forecasts for its investment bank, as the global corporate dealmaking slump continues.
On the other hand, the euro zone’s largest bank, BNP Paribas, surpassed Q2 estimates, and its stock jumped 4%.
In Asia, Hong Kong shares (HSI) rose in line with world markets, but mainland China indices continue to struggle. China’s industrial profits have recorded a double-digit pace of declines for the sixth consecutive month, falling nearly 17% for the year through June.
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