European shares rise amid Powell inflation comments, ECB and BoE rate decisions

By Scott Kanowsky

Investing.com -- European shares rose on Thursday, extending a rally in Asia, as investors examined comments from Federal Reserve chair Jerome Powell on the path forward for inflation and awaited the release of fresh central bank interest rate decisions.

At 04:15 ET (09:15 GMT), the regional Stoxx 600 gained 0.81%, the DAX Index in Germany traded 1.55% higher, the CAC 40 in France added 0.81%, and the FTSE 100 in the U.K. increased by 0.36%.

Attention in markets is turning to the latest policy decisions today from the European Central Bank and the Bank of England, with both widely expected to hike borrowing costs by 50 basis points as they attempt to corral elevated inflation.

ECB president Christine Lagarde said in January that the central bank will "stay the course" on its current monetary policy tightening cycle, adding that price growth is still "way too high" despite recent data suggesting that it may have peaked.

The BoE also faces stubbornly high prices, with inflation running higher than in the U.S. or Europe. But further raising interest rates - and, in turn, the cost of mortgages and credit cards - could weigh on an economy already tipped by the IMF to be only in the G7 to contract in 2023.

The BoE's decisions are due at 07:00 ET, while the ECB's are due at 08:15 ET. Bank of England Governor Andrew Bailey then speaks at 09:15 ET, while the ECB's press conference starts at 08:45 ET.

Traders are examining a rate decision from the Federal Reserve on Wednesday as well. As expected, the U.S. central bank hiked borrowing costs by 25 basis points, pumping the brakes slightly on policy tightening after a string of unprecedently large increases last year.

Fed chair Jerome Powell said a "disinflationary" process was now underway, but warned that "ongoing" hikes would be needed to bring price growth back down to its 2% target.

Asian shares soared, while the dollar eased after Powell's statement fueled hopes that the climb in U.S. interest rates will come to an end soon.

In the corporate world, Meta Platforms (NASDAQ:META) promised to strictly corral costs this year and unveiled a new $40 billion share buyback, sending the stock higher in after-market trading. The parade of tech giants reporting their latest results is set to continue later on Thursday with earnings from Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) later on Thursday.

Shell PLC (LON:SHEL), meanwhile, has reported better than expected fourth quarter income, driving 2022 profit up to a record high, as the British oil and gas company was boosted by a surge in energy prices sparked by the war in Ukraine. Shares in the group rose.

Telecom Italia (BIT:TLIT) jumped after Italy's largest phone group received a bid of undefined size from U.S. fund KKR for a controlling stake in its domestic landline network.

Elsewhere, U.S. crude futures were 0.16% lower at $76.29 a barrel by 04:15 ET, while the Brent contract was down 0.29% to $82.60 per barrel.

Additionally, gold futures increased by 1.38% to $1,969.55/oz, while the EUR/USD gained 0.05% to 1.0994.