# Fed rates up, BoE up, ECB up, stocks up
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-02-02
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Global Stock Markets soar as ECB & BoE Follow Fed in
Meta Description: Stock markets soar as major central banks raise rates. Fed, BoE, and ECB all hint at nearing end of tightening cycles. Stay up-to-date with Reuters!
URL: https://financedigest.com/fed-rates-up-boe-up-ecb-up-stocks-uphtml

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By Marc Jones

LONDON (Reuters) – Higher stock markets showed the bulls were still firmly in charge on Thursday as the European Central Bank and Bank of England followed the U.S. Federal Reserve in extending one of fastest [rise in global interest rates](https://www.financedigest.com/oil-falls-as-earthquake-impact-on-crude-eases-rate-hike-fears-rise.html "Oil falls as earthquake impact on crude eases, rate hike fears rise") on record.

Despite the harmony of hikes, traders were [holding on to the view that slowing economies would probably lead the heavyweights in the central banking](https://www.financedigest.com/bank-of-canada-seen-on-hold-even-as-economy-accelerates.html "Bank of Canada seen on hold even as economy accelerates") ring to rein in the punches.

Fed chair Jerome Powell’s message on Wednesday after its quarer point [hike that a “disinflationary” process was taking hold kept both European shares](https://www.financedigest.com/uks-bellway-to-buy-back-shares-hike-social-housing-output.html "UK’s Bellway to buy back shares, hike social housing output") and Wall Street pointing higher \[.N\], and the [dollar near a 10-month low](https://www.financedigest.com/euro-rises-after-spanish-cpi-dollar-slips-towards-8-mth-low.html "Euro rises after Spanish CPI, dollar slips towards 8-mth low"). \[.EU\]\[/FRX\]

The [BoE’s policymakers had then raised Britain’s rates](https://www.financedigest.com/uk-economys-unexpected-bounce-spurs-more-boe-rate-hike-talk.html "UK economy’s unexpected bounce spurs more BoE rate hike talk") by 50 basis points with a thumping 7-2 majority. The ECB matched the move and signalled it would be another 50 bps [next month](https://www.financedigest.com/ferry-industry-celebrates-fifth-successive-year-of-growth-for-car-travel-by-sea-and-four-new-ships-launching-in-next-twelve-months.html "Ferry industry celebrates fifth successive year of growth for car travel by sea And four new ships launching in next twelve months") too.

The usual post-decision [action was lacking as the euro barely moved](https://www.financedigest.com/how-to-move-from-words-to-actions-in-gender-equity.html "How to move from words to actions in Gender Equity") at just under $1.10.

The pound was a groggy 0.5% lower after the BoE raise, although the parallel drop in [bond market](https://www.financedigest.com/stocks-up-bond-yields-fall-as-markets-mull-a-fed-policy-pause.html "Stocks up, bond yields fall as markets mull a Fed policy pause") borrowing costs left the gap between U.S. and [German 10-year yields](https://www.financedigest.com/german-yields-steady-spreads-tighten-after-recent-repricing.html "German yields steady, spreads tighten after recent repricing") at its smallest since September 2020. \[GVD/EUR\]

After the Fed and BoE both hinted at being close to the peak in their cycles, today’s meeting suggests the [ECB are comfortable that they are also close to the end](https://www.financedigest.com/analysis-investors-stick-to-bets-on-early-end-to-ecb-hikes-as-uncertainty-grows.html "Analysis-Investors stick to bets on early end to ECB hikes as uncertainty grows") of their monetary tightening,” said Steve Ryder, a senior portfolio manager at Aviva Investors.

Away from the central bank action, there was more drama in India as one of its biggest firms, Adani Group, was forced the axe a long-planned $2.5 [billion stock offer](https://www.financedigest.com/copper-miner-teck-resources-rejects-glencores-22-5-billion-offer.html "Copper miner Teck Resources rejects Glencore’s .5 billion offer") in the wake of allegations, denied by the firm, of hidden debt and stock manipulation.

Its flagship firm Adani Enterprises plunged 10% on Thursday, taking the wider group’s overall [losses since](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down") the scandal erupted to more than $100 billion.

Elsewhere, though it did not derail the optimism that slowing, stopping and eventually lower interest [rates in major economies will avoid a major economic](https://www.financedigest.com/stocks-falter-as-economic-worries-nag-nz-delivers-big-rate-hike.html "Stocks falter as economic worries nag, NZ delivers big rate hike") slowdown.

MSCI’s broadest [index of global](https://www.financedigest.com/2017-global-payroll-complexity-index-reveals.html "2017 Global Payroll Complexity Index Reveals ") shares, which covers 47 countries was up 0.25 having just hit a near six-month high.

Nasdaq futures were up 1.3%, thanks to an additional boost of a $40 billion Meta share buyback plan announced after-hours in the previous session, which was [lifting tech stocks](https://www.financedigest.com/asian-stocks-rally-as-bank-jitters-calm-alibaba-lifts-mood.html "Asian stocks rally as bank jitters calm, Alibaba lifts mood") elsewhere. \[.N\]

Asia-Pacific [shares where some of the biggest microchip makers](https://www.financedigest.com/ubisoft-shares-slump-20-after-french-video-game-maker-warns-on-revenue.html "Ubisoft shares slump 20% after French video game maker warns on revenue") and Chinese internet giants are listed closed up 0.2%.

That index is now up nearly 30% since October, helped heavily by China abandoning many of its [COVID-19 restrictions](https://www.financedigest.com/factbox-britain-scraps-all-remaining-covid-19-restrictions.html "Factbox-Britain scraps all remaining COVID-19 restrictions").

GRAPHIC: The race to [raise rates](https://www.financedigest.com/european-central-bank-to-raise-deposit-rate-to-3-25-by-mid-year-reuters-poll.html "European Central Bank to raise deposit rate to 3.25% by mid-year: Reuters poll") (https://www.reuters.com/graphics/CANADA-CENBANK/dwvkdeaqopm/chart.png)

![](https://www.globalbankingandfinance.com/wp-content/uploads/2023/02/11.jpg)

BOE, ECB & EARNINGS

The Fed’s 25 basis points interest [rate increase on Wednesday came after a year of larger hikes](https://www.financedigest.com/instant-view-ecb-sticks-with-big-rate-hike-even-as-bank-fears-roil-markets.html "Instant View: ECB sticks with big rate hike even as bank fears roil markets"). Though its statement said policymakers [expected “ongoing increases” going forward traders leapt on Powell’s “disinflationary” view](https://www.financedigest.com/instant-view-us-may-payrolls-rise-up-than-expected.html "Instant View: US May payrolls rise up than expected"). \[.N\]

Ali Hassan, portfolio manager and managing director at Thornburg Investment Management, said [Powell had also seemingly shrugged off easing](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") financial conditions as a concern in his news conference.

This was a green light that the [market could buy without feeling that they are fighting the Fed,”](https://www.financedigest.com/us-stock-futures-bonds-rally-as-markets-flirt-with-fed-pause.html "US stock futures, bonds rally as markets flirt with Fed pause") he said.

Jamie Niven, a Senior Fund Manager at Candriam, said the BoE might now make only one more [hike after its 10th in a row took UK rates](https://www.financedigest.com/oil-up-2-as-dollar-weakens-on-small-us-fed-rate-hike.html "Oil up 2% as dollar weakens on small US Fed rate hike") to 4% or maybe even none if global growth splutters again.

Abrdn’s deputy chief economist Paul Diggle said the ECB, which also laid out a 15 billion euro-a-month “quantitative tightening” plan, had added a [deliberate dash of caution by not pre-committing to any further rate rises](https://www.financedigest.com/shares-slip-yields-rise-as-u-s-data-sparks-rate-hike-concerns.html "Shares slip, yields rise as U.S. data sparks rate hike concerns") beyond next month.

U.S. earnings season is in full swing too. [Facebook owner Meta](https://www.financedigest.com/facebook-parent-meta-is-preparing-large-scale-layoffs-this-week-wsj.html "Facebook parent Meta is preparing large-scale layoffs this week – WSJ") was set to surge after its after-hours buyback news, while internet giants Apple and Amazon are also due to report later.

In the currency market, the [dollar buckled following Powell’s](https://www.financedigest.com/dollar-jumps-as-powell-flags-higher-terminal-rate.html "Dollar jumps as Powell flags higher terminal rate") remarks on Wednesday but was little changed at 101.50 as U.S. trading started gathering momentum.

The euro was in ECB wait mode at, the yen was [stalled at 128.97 per dollar](https://www.financedigest.com/world-stocks-cling-to-upbeat-mood-dollar-stalls.html "World stocks cling to upbeat mood, dollar stalls"), while sterling was down below $1.23 having been above 1.24 earlier in the week.

In commodities, [oil steadied](https://www.financedigest.com/oil-steadies-after-dipping-on-china-outlook-investors-await-fed-clues.html "Oil steadies after dipping on China outlook; investors await Fed clues"), having climbed on the back the soft dollar, while gold added 0.2% to $1,953.44 an ounce, having touched a nine-month high of $1,957 per ounce earlier.

Brent was at $82.23, down 0.75% on the day, while West Texas Intermediate (WTI) U.S. crude sat at $75.93 per barrel. \[O/R\]

(Additional reporting by Ankur Banerjee in Singapore; Editing by Mark Potter and Arun Koyyur)


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