European stocks higher; Barclays, ECB meeting in focus

European stock markets traded higher Thursday, as investors digest a slew of corporate earnings as well as comments from Fed Chair Jerome Powell ahead of the latest European Central Bank meeting.

At 04:25 ET (08:25 GMT), the DAX index in Germany traded 1% higher, the CAC 40 in France climbed 1.4% and the FTSE 100 in the U.K. traded 0.3% higher.

Earnings continue to pour in
The second quarter earnings season is in full flow, attracting a lot of attention from investors.

Barclays (LON:BARC) stock slumped 4.5% after the lender warned of pressure on its U.K. retail business, while its investment bank disappointed as global dealmaking slumped. The announcement of an increased share buyback did little to lift spirits.

Shell (LON:RDSa) stock fell 1.8% and TotalEnergies (EPA:TTEF) drifted lower after the energy giants reported sharp falls in second-quarter profit from bumper 2022 earnings as oil and gas prices, refining margins and trading results all weakened.

Renault (EPA:RENA) stock fell 1.1% despite reporting a record operating margin for the first half of the year, with the French carmaker announcing a new structure for its partnership with Nissan (TYO:7201), in which Renault reduces its stake in the Japanese company.

Nestle (SIX:NESN) stock rose 1.5% after the Swiss food giant lifted its full-year sales outlook after raising prices to cope with higher input costs, while French retailer Casino (EPA:CASP) posted an operating loss in the first half of 2023, as falling sales and price cuts at its hypermarkets and supermarkets hit its core French operations.

In the U.S., Meta Platforms (NASDAQ:META) stock soared premarket after the Facebook parent reported a strong rise in advertising revenue. More results are due from the likes of Intel (NASDAQ:INTC), Ford (NYSE:F), Mastercard (NYSE:MA), and McDonald’s (NYSE:MCD) later in the session.

End of Fed’s tightening cycle?
Sentiment was given an early boost by the growing belief that the U.S. Federal Reserve’s interest rate hike on Wednesday could be the last of its tightening cycle, even after Fed Chair Jerome Powell kept open the possibility of a further hike later in the year.

Powell noted that the central bank no longer expects a U.S. recession, raising the possibility of a so-called soft landing for the largest economy in the world and a major global growth driver.

Focus turns to ECB
Attention now turns to the European Central Bank, which is also expected to raise interest rates by a quarter of a percentage point later in the session.

Given a hike is largely baked in, the focus will be on President Christine Lagarde’s following press conference for clues on what’s to come later in the summer.

Inflation remains elevated in the eurozone, with annual CPI at 5.5% in June, but growth is slowing and recent comments from council members have tended towards the dovish side.

German consumer sentiment is expected to improve slightly in August, with the GfK institute’s consumer sentiment index rising to -24.4 heading into August from a slightly revised -25.2 in July.

Oil prices rise on tighter supply expectations
Oil prices rose Thursday, rebounding from the previous session’s losses as traders focused on expectations of tighter supplies from major oil producers, even after the Federal Reserve tightened monetary policy once more.

Saudi Arabia and Russia both recently announced plans to cut production further in August, in an attempt to boost prices by tightening global supply.

Oil prices fell on Wednesday after data showed U.S. crude inventories fell less than expected and the Federal Reserve raised interest rates again.

By 04:25 ET, U.S. crude futures traded 0.8% higher at $79.42 a barrel, while the Brent contract climbed 0.6% to $83.06.

Additionally, gold futures rose 0.4% to $1,977.95/oz, while EUR/USD traded 0.1% higher at 1.1130.

European stocks higher; Barclays, ECB meeting in focus