European stock markets edge higher ahead of pause in US rate hikes

European shares rose on Wednesday, supported by banks and miners, in advance of a broadly priced-in pause in interest rate hikes by the US Federal Reserve.

The decision to keep its key interest rate unchanged was confirmed by the Fed after the close of European markets.

The European Central Bank will hold its policy meeting on Thursday, where it is expected to hike rates by another 25 basis points to tame stubborn inflation.

Dublin

The Iseq index rose 0.9 per cent, outperforming many of the big European indices thanks to strong gains for the banks and building materials group CRH. The cement maker rose almost 3.6 per cent to €47.27, while Bank of Ireland closed up 2.9 per cent at €9.41 and AIB finished 2.3 per cent higher at €3.88.

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Packaging group Smurfit Kappa advanced 1.75 per cent to €34.30, while Kerry Group added 0.5 per cent to €90.12.

It was a less impressive session for Ryanair, which fell 0.7 per cent to €16.84, and Paddy Power owner Flutter Entertainment, which dropped almost 1.6 per cent to €181.25.

London

The UK’s FTSE 100 rose 0.1 per cent as mining stocks extended gains, tracking higher metal prices, while Robert Walters’ profit warning weighed on fellow recruitment firms listed on the midcap index.

Industrial metal miners continued their recent rally, gaining 2.8 per cent as copper prices rose on a softer dollar and expectations of further stimulus to boost growth in top consumer China.

The domestically focused FTSE 250 midcap index edged 0.1 per cent lower as recruitment firms Hays and Pagegroup lost 6.3 per cent and 6.2 per cent respectively, following Robert Walters’ warning that its profit may be significantly lower than market expectations. Robert Walters shares tanked 13.7 per cent.

Vodafone gained 0.6 per cent after the mobile operator and CK Hutchison struck a deal to merge their British mobile operations. Gaming company Entain dropped 8.7 per cent on a deal to buy Poland’s STS Holdings.

Aston Martin advanced 7.1 per cent after analysts at Jefferies upgraded the luxury carmaker’s rating to “hold” from “underperform”. Games Workshop jumped 5.9 per cent after the miniature war game maker forecast higher full-year earnings.

Europe

The pan-European STOXX 600 index closed 0.4 per cent higher.

Banks, which tend to benefit from higher rates, rose 1.1 per cent. Italy and Spain’s lender-heavy indexes rose 0.9 per cent and 1.1 per cent respectively, to spearhead gains among large regional peers.

Miners led sectoral gains, up 2.3 per cent, as copper prices rose on a weaker dollar and expectations of further stimulus to boost economic growth in top consumer China boosted sentiment.

Logitech plunged 12.5 per cent to the bottom of the STOXX 600 after the computer accessories maker said its chief executive Bracken Darrell is resigning from his role effective immediately.

US

Wall Street stocks fell after the Federal Reserve kept US interest rates unchanged but hinted in new economic projections that borrowing costs will probably rise by another half of a percentage point by the end of this year.

The S&P 500 reversed early gains to trade lower after the US central bank reacted to a stronger-than-expected economy and a slower decline in inflation.

Earlier on Wednesday, a bigger-than-expected drop in US producer prices in May due to a decline in the costs of energy goods and food signalled that inflation was cooling. Data a day earlier showed consumer prices moderated last month.

Weighing on the Dow, UnitedHealth Group tumbled 7.2 per cent after the health insurer warned of a spike in medical costs in the second quarter as more older adults undergo non-urgent procedures they had delayed during the pandemic.

Additional reporting: Reuters