European stocks closed mixed after the ECB raised the rate by 50 basis points
(RTTNews) – European stocks posted a mixed performance on Thursday as investors remained largely cautious, reacting to the European Central Bank’s first rate hike in 11 years, and amid lingering concerns over slowing growth and the rise in inflation.
Meanwhile, Russia has taken over natural gas supplies from Germany, helping to ease concerns about the fallout on the economy.
The markets also digested the news of the resignation of Italian President Mario Draghi. The resignation plunged into further political uncertainty following Draghi’s resignation. The resignation comes after a number of ruling coalition parties abstained in a confidence vote aimed at renewing and reuniting the fractured alliance.
The pan-European Stoxx 600 index rose 0.44%. Britain’s FTSE 100 edged up 0.09%, France’s CAC 40 gained 0.27% and Germany’s DAX fell 0.27%, while the Swiss SMI climbed 0.68%.
Among other European markets, Austria, the Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, the Netherlands and Sweden finished higher.
Belgium, Norway, Poland, Portugal, Russia, Spain and Turkey closed lower.
The European Central Bank raised interest rates for the first time in over a decade today, raising them 50 basis points more than expected, and unveiled an anti-fragmentation tool called the Transmission Protection Instrument, or TPI.
ECB President Christine Lagarde said in June that the bank would raise interest rates by 25 basis points in July and follow with a similar, if not larger, step in September if the macroeconomic outlook deteriorates.
“The Governing Council considered it appropriate to take a larger first step on its path to normalizing policy rates than signaled at its previous meeting,” the ECB said in a statement. “This decision is based on the updated inflation risk assessment by the Governing Council and the enhanced support provided by the TPI to the effective transmission of monetary policy.”
The main refinancing rate was raised from zero to 0.50% and the deposit facility rate was raised from -0.50% to zero. The marginal lending rate was increased to 0.75% from 0.25%. Eurozone interest rates were last raised in July 2011.
Meanwhile, the Office for National Statistics said the UK budget recorded its second-biggest deficit for the month of June as high inflation pushed up the cost of servicing government debt.
Net public sector borrowing excluding public sector banks rose by £4.1bn to £22.9bn in June, the second highest borrowing in June since monthly records began in 1993 This is £0.6bn more borrowing than the Office for Budget Responsibility had forecast. .
In the UK market, Howden Joinery Group, 3I Group, Spirax-Sarco Engineering, ICP, Haleon Plc, Halma, Taylor Wimpey, Intertek Group, Experian, RS Group, Barratt Developments, Croda International and Persimmon won 2.5-4, 3%.
Harbor Energy plunged 5.65%. Dechra Pharmaceuticals, Avast, BAE Systems, SSE, IAG, National Grid and GSK ended down 1.5-3%.
Ocado Group shares fell sharply after the company reported a bigger first-half loss.
In the French market, Publicis Groupe rebounded by around 5%. Schneider Electric, CapGemini, Legrand, Teleperformance, Pernod Ricard, Hermes International and STMicroElectronics gain 1 to 2.5%.
Atos ended down more than 5%. Accor and Faurecia ended down around 3% and 2.7% respectively. Unibail Rodamco, Crédit Agricole, Orange, Air France-KLM, Sodexo and Sanofi also closed significantly lower.
In the German market, Sartorius climbed more than 6% after the company confirmed its outlook for FY22 after reporting a 77% increase in first-half profit.
Merck advanced 5.3%, while Siemens Healthineers, Qiagen, Brenntag, Puma, Symrise, Infineon Technologies and Vonovia gained 1.4 to 4%.
HelloFresh plunged almost 14%. E.ON, SAP, Volkswagen, RWE, Fresenius Medical Care, Bayer, BASF and Covestro lost 2-4%.
Finnish telecoms equipment maker Nokia jumped 9% after reporting better-than-expected second-quarter earnings and supporting its FY22 outlook.
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