Stocks steadied on market bets on Bank of England’s huge rise

  • Market bet on 50bp hike by Bank of England
  • Fed official: 50bp hike in September “reasonable”
  • Oil rebounds from six-month low
  • Lufthansa returns to operating profit
  • Credit Agricole sees a jump in profits

LONDON, Aug 4 (Reuters) – Strong earnings from Credit Agricole and Lufthansa lifted stocks on Thursday as tensions eased over Nancy Pelosi’s visit to Taiwan and markets bet that the Bank of England will reduce inflation since 1995. will increase interest rates by the largest amount for.

STOXX (.STOXX) Major European companies’ index rises 0.33% after German airline Lufthansa (lhag.de) returned to an operating profit, while French bank Credit Agricole joined a growing roster of better-than-expected earnings at banks. read more

shares in hong kong (.hsi) Tracking broader gains in Asia grew 2% (.MIAP00000PUS)House of Representatives Speaker Pelosi on a visit to Taipei this week, lamenting some of the damage caused after the Sino-US conflict, angered China. read more

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Oil prices bounced back from a six-month low, while the dollar was pushed back by US Federal Reserve officials against suggestions it would slow the pace of interest rate hikes, one said by 50 basis points. The increase would be “justified”. read more

After major interest rate hikes by the Fed and the European Central Bank to stave off a decades-high rise in prices, investors expect the Bank of England to rise 50 basis points when it announces the results of its monetary policy meeting at 1100 GMT. Will follow suit with read more

Sterling could struggle in the absence of a surprising surprise – the British economic outlook in particular looks weak, while US data has offered some upside surprises.

Sterling was trading slightly higher at $1.2162 during the day.

“People are leaning towards a 50 basis point increase, probably a split decision. Then that’s really the way forward to approach the outlook,” said Michael Hewson, chief market analyst at CMC Markets.

“The UK economy is heading into recession and there is nothing they can do about it and the primary focus of the Bank of England should be on pulling inflation down to its current levels, and frontloading like the Fed,” Hesson he said.

A survey by the European Central Bank showed that euro area consumers are prepared for the economy to shrink and continue high inflation. read more

S&P 500 futures were little changed before Wall Street opened, a key piece of data for Friday’s non-farm payrolls week.

Central Bank Policy Rates

No earnings reset yet

Casper Elmgreen, head of equities at asset manager Amundi, said the illusion that decades of high inflation would be temporary is now firmly dispelled as fuel bills rise and companies are finding it difficult to find employees.

“The big picture here is that a lot will be needed to restore price stability. The risk here is that we underestimate how powerful a force we are dealing with,” Elmgreen said.

Second-quarter earnings season now underway doesn’t provide a major “reset” to ElmGreen, which sees earnings expectations still very high for 2022, with the economy slowing overall.

“I think that could come in the third quarter or the fourth quarter as we start to see more demand impact,” Elmgreen said.

An ISM survey on Wednesday showed the US services industry picked up unexpectedly in July, leading to sell-offs in US stocks and bonds and rallies for the dollar with the Nasdaq. (.IXIC) rose 2.5% to a three-month high. read more

Fed officials have provided a flamboyant chorus this week, pinning the short end of the yield curve. The two-year Treasury yield was trading at 3.1040%, while the benchmark 10-year yield was trading at 2.7318%, both slightly weaker.

The dollar has halted the decline that began in mid-July, supported by both growth expectations and heightened political tensions.

Fed funds futures remain pricey for a rate cut expected by the middle of next year and the inversion of the US yield curve, with 10-year yields lower than two-year yields, has investors looking for a long way to go. development will suffer.

“I think the market will remain volatile,” said David Ratliff, head of banking and capital markets for Asia Pacific at Wells Fargo, Hong Kong. “People are starting to read through the current round of Fed tightening and the momentum.”

The dollar index was trading at 106.30, down 0.169%. One euro weighed down by Europe’s energy crisis bought $1.0185.

Brent crude futures were slightly weaker at $96.75 a barrel as supply concerns began a rebound from multi-month lows on Wednesday after US data indicated weak fuel demand. read more

Spot gold rose 0.5% to $1,773 an ounce.

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Reporting by Tom Westbrook and Kevin Buckland in Singapore; Editing by Kim Coghill and Mark Potter

Our Standards: Thomson Reuters Trust Principals.

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