European stocks open sharply higher after Fed

(ABM FN-Dow Jones) European stocks are set to open significantly higher on Thursday, after the Federal Reserve’s rate decision that was well received on Wall Street Wednesday night.

IG expects an opening gain of 304 points for the German DAX, as well as 145 points for the French CAC 40 and a gain of 91 points for the British FTSE 100.

European shares closed lower on Wednesday, awaiting the US Federal Reserve’s rate decision.

The trading day will be dominated by the Fed’s after-hours rate decision and subsequent comment from Chairman Jerome Powell, with the market especially looking forward to comments from the banker on how to raise rates in the coming period.

“Markets are clinging to hope that interest rate hikes by the Fed are now largely determined by the market,” said Jeffrey Haley, market analyst at Oanda.

Several services sector PMIs released today from the Eurozone, all point to further growth, although the acceleration of growth in Germany was slightly behind Markit’s preliminary readings.

In March, eurozone retail sales fell 0.4 percent month-on-month, as measured by volume. Economists expected an increase of 0.1 percent.

In the morning, it also appeared that German exports fell on a month-over-month basis in March.

company news

Volkswagen saw its profit increase significantly in the first quarter, while sales remained fairly stable. The stock fell about 1.0 percent.

Equinor increased its dividend significantly in the first three months of 2022. Equinor stock gained about 3.0 percent.

Siemens Healthineers has again raised its forecast for the full fiscal year 2022 after better-than-expected second-quarter results. The stock closed up 3.0 percent.

Ryanair saw a sharp rise in passengers carried in April, while its load factor was also at its highest level in months. The stock rose about 0.5 percent.

In Paris, Vivendi shares rose 2.0 percent and Engie rose 0.5 percent, but ArcelorMittal shares fell more than 4.0 percent.

In Frankfurt, RWE stock is up 4.0 percent, Fresenius is up 3.5 percent, and BASF is up 3.0 percent. Hellofresh lost more than 9.0 percent, while Delivery Hero dropped about 5.5 percent.

In Amsterdam, Just Eat Takeaway’s share price fell more than 9.0 percent. Shareholders approved the reappointments of both CEO Jitsi Groen and chief financial officer Brent Wisink on Wednesday afternoon, although the latter garnered several votes against it. The reappointment of the Chairman of the Supervisory Board and the Chief Operating Officer was already withdrawn prior to the opening of the auction.

In Amsterdam, shares of Wolters Kluwer and Universal Music Group were rewarded for their quarterly updates, and in Brussels that was the case in Solvay, which also raised its forecast for the year. However, Umicor was the star in Brussels, posting a gain of more than 10 per cent following takeover rumors.

Euro Stoxx 50 3724.99 (-1.0)
Stokes Europe 600441.37 (-1.1%)
DAX 13,970.82 (-0.5%)
CAC 40 6,395.68 (-1.2%)
FTSE 100 7,493.45 (-0.9%)
SMI 11,880.24 (-1.0%)
Ax 698.68 (-1.0%)
Bell 20 4,065.34 (-0.3%)
FTSE MIB 23,902.06 (-1.4%)
IBEX 35 8,500.50 (-1.0%)

US property rights

Wall Street opened flat slightly higher on Thursday, according to US futures.

US stocks closed strongly higher on Wednesday after the Federal Reserve raised key interest rates by 50 basis points, as expected.

The center of gravity fell on Wednesday with the release of the Federal Reserve’s interest rate decision. In line with expectations, the US central bank raised the federal funds rate by 50 basis points to a range of 0.75 to 1.00 percent. The discount rate was increased 0.50 percentage points to 1.00 percent.

In addition, the central bank announced that it will cut its balance sheet of $9 trillion as of June 1. For T-bills, the limit will be initially set at $30 billion per month. For mortgage-backed securities, the limit will initially be set at $17.5 billion per month. After three months, that amount will increase to $60 and $35 billion per month, respectively.

Chairman Jerome Powell said at the press conference following the rate decision that a 50 basis point interest rate hike is on the table for upcoming meetings. He added that the US economy is very strong and in a good position to deal with these interest rate hikes. Powell stressed that the Fed must be agile and will do everything in its power to avoid creating market uncertainty.

The decision was not surprising, according to market analyst Naim Aslam of Avatrade. The fact that the market expected a rate hike kept the nerves in the market in check after the decision.

Investors also looked at corporate earnings to see if inflation was hurting profits or affecting consumer spending.

On the macroeconomic front, it was also announced that the number of mortgage applications in the US rose by 2.5% last week. The market index rose from 343.1 to 351.8.

Employment in the US private sector rose much weaker than expected in April. The number of jobs increased by 247 thousand jobs in April, while the market expected an increase of 390 thousand jobs.

Exports in the US rose 5.6 percent in March, while imports increased 10.3 percent.

Two PMIs for the services sector showed a slowdown in growth. The Markit PMI fell from 58.0 in March to 55.6 in April, while the Institute for Supply Management’s index fell to 57.1 from 58.3 in March.

June futures for a barrel of West Texas Intermediate crude closed 5.3 percent, or $5.40, higher on the New York Mercantile Exchange at $107.81 on Wednesday. The European Commission introduced new sanctions against Russia over the war in Ukraine. Part of it is a proposal to boycott Russian oil.

The latest data from the US Energy Agency (EIA) showed that US crude oil inventories rose last week.

On the macroeconomic front, only weekly aid requests are on the agenda in the United States on Thursday.

company news

Airbnb stock rose about 7.0 percent. The company expects to close for the first time this year.

Yum Brands reported significantly lower store sales growth than the prior year and also saw a slight decline in adjusted earnings per share. However, thousands of new stores have ensured strong sales growth based on reports. The stock gained about 3.0 percent.

Uber Technologies reported significantly more revenue in the first months of the year, exceeding its expectations. The EBITDA result was $168 million and will increase to $240 million to $270 million in the next quarter. The stock fell about 4.0 percent.

Starbucks reported more sales and profits last quarter and talked about a record quarter. The coffee conglomerate’s share gained more than 10.0 percent.

Moderna exceeded expectations. Revenue of $6.1 billion was much higher than the $4.2 billion that analysts had estimated. Profits also rose sharply. The stock rose about 5.5 percent.

Lyft shares fell about 30.0 percent in pre-sale electronic trading. The company will invest more this quarter in recruiting drivers to grow the taxi app. This will be at the expense of operating profit. According to analysts, expectations for the current second quarter were also low.

Insurer AIG reported more profit in the first quarter, in part due to lower costs for natural disasters. Industry peer Prudential had to report a net loss, due to losses on investments and higher interest rate fees, after posting solid investment gains in the previous year. The insurance company rose by about 7.5 percent.

S&P 500 Index 4300.17 (+3.0%)
Dow Jones 34,061.06 (+2.8%)
Nasdaq Composite 12,964.86 (+3.2%)

Asia

Asian stocks rose on Thursday. China is open again, but Japan is closed.

Nikkei 225 26818.53 (Closed)
Shanghai Composite 3080.77 (+1.1%)
Hang Seng 21006.67 (+0.7%)

Currencies

The EUR/USD was trading at 1.0614. When the US markets were closed on Wednesday, the currency pair was still moving at 1.0601 and when the European markets were closed there was still a position at 1.0558 on the plates.

US Dollar / Japanese Yen 129.25.0000
EUR / USD EUR 1.0614
EUR/JPY 137.16

Macro schedule:
01:30 Caixin Purchasing Managers Index Services – April (CHI)
08:00 Factory Orders – March (Germany)
10:30 Services PMI – Final April. (United kingdom)
13:00 BoE – Interest Rate Decision (UK)
14:30 Support Requests – Weekly (US)
00:00 OPEC + . meeting

Company news:
07:00 Adecco – First Quarter Numbers (ZoE)
07:00 Airbus – First Quarter Numbers (Fra)
07:00 Lufthansa Germany – First Quarter Numbers (Germany)
07:00 BMW – First Quarter Numbers (Germany)
07:00 Henkel – First Quarter Figures (Germany)
07:00 Société Générale – First Quarter Figures (Fra)
07:00 Zalando – First Quarter Figures (Germany)
13:00 Nicolas – First Quarter Numbers (US)
22:00 GoPro – First Quarter Numbers (US)

Source: ABM Financial News

From Beursplein 5, Editors ABM Financial News Keep a close eye on developments on the stock exchanges, and the Amsterdam Stock Exchange in particular. The information in this column is not intended as professional investment advice or as a recommendation to make certain investments.