uropean markets climbed higher on Thursday after the European Central Bank signalled interest rate hikes could be coming to an end.
All Europe’s top indexes finished higher after the ECB raised rates to record levels but president Christine Lagarde suggested the latest increase – a ninth consecutive hike – could be the last under the central bank as inflation eases.
Traders were therefore positive despite Federal Reserve chair Jay Powell suggesting a day earlier that there could be more tightening ahead.
London’s top firms saw shares finish higher amid the wave of positivity, but they were outperformed by European counterparts after a number of shaky earnings announcements by major city firms.
There are still pockets of weakness on the earnings front and this is causing the FTSE 100 to underperform due to lower energy profits, and underperformance from the telecoms sector
Barclays, BT and Shell were among firms to lose ground after trading announcements failed to impress investors and traders.
The FTSE 100 moved 0.21%, or 15.87 points, higher to finish at 7,692.76.
Germany’s Dax index was 1.7% higher for the day while the Cac 40 closed up 2.05%.
Michael Hewson, chief market analyst at CMC Markets UK, said: “We’ve seen a strong session for markets in Europe as investors increasingly adopt the view that central banks could be done when it comes to further rate hikes, while the latest set of US economic numbers pointed to a goldilocks scenario for the US economy.
“There are still pockets of weakness on the earnings front and this is causing the FTSE 100 to underperform due to lower energy profits, and underperformance from the telecoms sector.”
In the US, markets also opened higher, with the S&P 500 lifting to its highest since March 2022 after US GDP grew by 2.4% over the second quarter of 2023.
Meanwhile, sterling moved higher against the euro, which had originally been strong due to the latest ECB rate hike but slumped after the markets started to price in no further rate increases.
The pound was down 0.16% to 1.305 US dollars and was flat at 1.162 euros at market close in London.
In company news, Shell was a drag on the FTSE after the oil giant failed to meet industry earnings guidance.
Its adjusted earnings more than halved in the three months to the end of June when compared with the same period a year ago. Shares fell by 32.5p to 2,364p as a result.
Elsewhere in energy, British Gas owner Centrica saw shares surge higher after half-year earnings at its retail supplier business soared by nearly 900%.
Shares in the energy firm were up 9.35p at 133.35p as a result.
ITV shares closed at their highest level for two months, rising by 2.88p to 72.44p despite the broadcasting business revealing group pre-tax profits plunged by 79% to £45 million for the six months to June 30
The price of oil shifted back towards its recent highs as it benefited from weakness in the US dollar.
A barrel of Brent crude oil rose by 1.24% to 83.95 US dollars at the time markets were closing in London.
The biggest risers in the FTSE 100 were Centrica, up 9.35p at 133.35p, Relx, up 119p at 2,661p, Informa, up 30.4p at 776p, Airtel Africa, up 3.9p at 113.6p, and Burberry, up 66p at 2,248p.
The biggest fallers of the session were St James’s Place, down 189.6p at 993.4p, SSE, down 106p at 1,701p, Barclays, down 8.66p at 155.4p, Endeavour, down 70p at 1,861p, and BT, down 2.6p at 123.9p.