Europe open: Shares lower as investors fret over rate moves
European shares opened lower on Thursday as investors continued to eye central banks for rate moves after surprise increases from Australia and Canada this month.
The pan-European Stoxx 600 index was down 0.15% in early deals. Sentiment was also hit by an OECD forecast on Wednesday the global economic growth will rise only moderately over the next year as the full effects of central bank rate hikes are felt.
Eyes are now on the Federal Reserve's next rate decision next week.
“Bank of Canada hiked rates and said more may be needed – again some think it was a surprise but really it was always on the cards,” said Markets.com analyst Neil Wilson.
“Is there a read across for the Fed next week? Perhaps...the BoC has been in front of the Fed and this move – coming after it paused its hiking cycle earlier in the year – suggests the Fed may opt to ‘skip’, a narrative officials have been leaning into lately based on their comments.”
“Play, pause or skip? It’s all about cutting the engines and letting the super tanker drift into harbour without crashing the boat and the pier. A lot will depend on the previous day’s CPI inflation data; we know the labour market remains robust, albeit business surveys point to a marked slowdown and recessionary indicators are flashing.”
In equity news, Wizz Air shares took off as the company said it expected a return to net profits this year on the back of higher demand.
Shares in Crest Nicholson fell as the UK housebuilder posted a 60% fall in half-year profits and warned of the potential hit to the property market if interest rate rises continued.
Reporting by Frank Prenesti for Sharecast.com