Open to close after Fed destroys hawkish bets

LONDON – European markets rebounded on Thursday, following global sentiment after the US Federal Reserve doused speculation about more aggressive monetary tightening.

The pan-European Stoxx 600 index rose 1.6% in early trading, with technology stocks contributing 3% to the lead as all sectors and major exchanges enter positive territory.

The Fed on Wednesday raised its benchmark rate by half a percentage point, the largest increase in two decades, as it appears to contain inflation at its 40-year high. The central bank will also start deleveraging its balance sheet in June.

However, Chairman Jerome Powell ruled out more aggressive hikes at future policy meetings, prompting a relief on Wall Street as traders began to support the Fed to contain inflation without triggering a recession.

US stock futures were muted in early premarket trading Thursday after the Dow rose more than 900 points during Wednesday’s regular trading session.

Shares in Asia-Pacific also rose in trading on Thursday following the Fed’s decision, with mainland Chinese stocks gaining gains as they returned to trading after a few vacation days.

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Focus in Europe on Thursday will be on the Bank of England, which is expected to announce a fourth consecutive rate hike to counter rising prices.

The war in Ukraine also remains on investors’ radar. Russian forces have reportedly renewed their attack on the Azovstal steel mill complex, a last stronghold for Ukrainian fighters in the southern port city of Mariupol.

Meanwhile, the EU has proposed a gradual ban on Russian oil in its sixth round of sanctions against Moscow since the unprovoked invasion of Ukraine.

Corporate earnings continue to guide individual stock price action in Europe. Shell, BMW, Leonardo, UniCredit, Intesa Sanpaolo, Banco BPM, Societe Generale, Credit Agricole, AXA, Stellantis, Airbus and Air France KLM were among others who reported before the bell on Thursday.

Airbus shares were up 8%, leading the Stoxx 600 in early trading after a strong first quarter report.

At the bottom of the European blue chip index, Britain’s Hikma Pharmaceuticals fell more than 9% after lowering its full-year outlook.

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