Shares hold gains as investors weigh prospect of ECB pause

European shares held on to gains after the European Central Bank (ECB) announced its ninth consecutive interest rate increase on Thursday as investors began to see light at the end of the current cycle of rate hikes.

The ECB’s governing council has “an open mind” as to what rate decisions it will take in September and subsequent meetings, the organisation’s president, Christine Lagarde, said at a press conference.

However, markets are increasingly hopeful that Frankfurt could press pause in six weeks’ time amid weakening industrial production in key euro area economy Germany.

Dublin

The Iseq index advanced 1.5 per cent on Thursday, slightly outperforming some of its European peers despite volatile trading in bank stocks.

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In what was otherwise a sea of green Bank of Ireland was among the weakest names on the day. Shares in the lender fell by slightly more than 1 per cent to €9.30 per share, while AIB was essentially flat on the session at €4.02.

Traders in Dublin said that the shares “sold right off” following the announcement of Frankfurt’s latest rates decision before strengthening towards the close. With investors expecting no further rate hikes this year on either side of the Atlantic, bank stocks could be tested in the near future.

However, heavyweights like CRH helped pull the index into the green. Shares in the building materials giant were up by almost 2.3 per cent to €54.46 per share after a series of strong results from its US peers.

Kingspan, meanwhile, topped the index, adding more than 3.7 per cent to €73.26 per share.

Europe

European shares advanced with the benchmark Stoxx 50 chalking up a 2.3 per cent gain and the pan-European Stoxx 600 ahead by 1.4 per cent. Media and technology stocks led gains with most sectors in the green amid a busy day of earnings and following the latest ECB’s rates decision.

Semiconductor stocks climbed with Dutch ASML and German Infineon ahead by 5.5 per cent and 5.4 per cent on the session.

Luxury giants EssilorLuxottica, Kering, Hermes and LVMH all added between 2.9 per cent and 4.4 per cent amid hope that the US Federal Reserve has reached the end of its current cycle of rates hikes.

Banks, meanwhile, held on to gains despite the ECB’s decision to stop paying interest on minimum reserves, a surprise move that saw some lenders, like Deutsche Bank, plunge. BBVA, BNP Paribas and ING Group among others all advanced by between 0.6 per cent and 2 per cent.

London

The benchmark FTSE 100 eked out a modest 0.2 per cent gain on Thursday, while the mid-cap FTSE 250 index was in advance of around 0.5 per cent.

Media shares gained the most on the index, adding 3 per cent, driven by a 4.1 per cent rise in exhibitions group Informa after it said it was on track to meet the top-end of its full-year forecasts on strong forward bookings and a robust recovery in China.

Energy shares slipped 1.1 per cent, the most on the FTSE, after Shell declined by 1.4 per cent after reporting a 56 per cent drop in its second-quarter profit.

NatWest, the bank at the centre of the Nigel Farage imbroglio, slipped a further 0.8 per cent in trading after Coutts chief executive Peter Flavel announced his resignation amid a widening scandal.

British financial stocks lagged generally, with Barclays down 5.2 per cent after it warned of growing pressure on its UK business.

New York

The Nasdaq 100 climbed about 1 per cent as a bullish forecast from Facebook parent Meta spurred a 7 per cent rally in the shares.

The S&P 500 was set for its highest since March 2022, while the Dow Jones Industrial Average fluctuated

A measure of big banks rose even after US regulators unveiled plans for a 19 per cent boost in capital requirements for the eight largest financial institutions.

Royal Caribbean Cruises advanced after raising its full-year profit forecast to a level that significantly beat expectations.

McDonald’s rose as sales and profit surpassed analysts’ projections, but the company warned of slower growth later this year amid a challenging economic backdrop.

Meanwhile Comcast gained after reporting profit that topped analysts’ estimates in the second quarter, even as internet and TV subscribers vanished. – Additional reporting: Reuters, Bloomberg