European stocks rose on Thursday at the first opportunity to react to the Federal Reserve’s latest decision, the biggest story being the sale of bonds that the central bank did nothing to stifle.
Stoxx Europe 600 SXXP,
increased by 0.2%, with even stronger gains for Stoxx Europe TMI. STVP,
10-year US Treasury yield TMUBMUSD10Y,
rose to 1.73%, the move coming as European traders began trading. Yields on German TMBMKDE-10Y,
and UK TMBMKGB-10Y,
connections with a similar maturity also increased, although not by the same magnitude. Yields are moving in the opposite direction to prices.
Banks, including Deutsche Bank DBK,
increased on the growing gap between short-term and long-term yields, while rising bond yields sent Nasdaq 100 futures NQ00,
lower.
The Federal Reserve dowry plot indicated that the average voter did not anticipate raising interest rates in two years. President Jerome Powell has said the central bank will keep policy free until employment recovers, as it has downplayed what is expected to be a sharp rise in inflation in the coming months.
The Bank of England makes a separate decision on the local interest rate at noon or 8 am Eastern time. Like the Fed, the focus will be on messaging, especially as vaccination efforts in the UK are fruitful. “While there is little doubt about the consensus for ‘no change’, the market will look for any indication of a change in MPC bias, either by vote or by outlook,” said Michael Matthews, fund manager at Invesco.
Also on the move in Europe, Volkswagen VOW3,
the preferred shares extended their flow to a new maximum of six years, increasing by 5%. Porsche Automobile Holding PAH3,
which is the majority owner of Volkswagen, also gained 5%. Hopes for VW’s electric vehicle ambitions were fueled by the company’s battery presentation earlier this week.
Sartorius SRT,
pharmaceutical and laboratory equipment supplier, increased by 10% after hiking sales and margin guidance for the year, mentioning the first 10 strong weeks of 2021.