European equities rose on Thursday at the first opportunity to react to the Federal Reserve’s latest decision, with the big story being the sale of bonds that the central bank did nothing to crack down on.
The Stoxx Europe 600 SXXP,
rose 0.3%, with even stronger gains for Stoxx Europe’s TMI value of the TMI value,
The yield of the 10-year US Treasury TMUBMUSD10Y,
jumped to 1.73%, with the movement occurring at the moment when European traders started their change. Yields in German TMBMKDE-10Y,
and UK TMBMKGB-10Y,
securities of similar maturity have also increased, although not to the same extent. Yields move in the opposite direction to prices.
Banks, including Deutsche Bank DBK,
widened in the widening gap between short and long-term yields, while rising bond yields sent Nasdaq-100 futures to the NQ00,
lower.
The Federal Reserve’s point chart signaled that the median voter did not anticipate an increase in interest rates in two years. President Jerome Powell said the central bank will keep the policy loose until employment recovers, while minimizing what is likely to be a big increase in inflation readings in the coming months.
The Bank of England, separately, is making its own decision on the interest rate at noon, local time, or at 8:00 am. Like the Fed, the focus will be on messages, particularly with the UK’s COVID-19 vaccination efforts being fruitful. “While there is little doubt about the ‘no change’ consensus, the market will be looking for any indication of a change in the MPC [Monetary Policy Committee’s] bias, whether by vote or perspective, ”said Michael Matthews, fund manager at Invesco.
Also on the move in Europe, the Volkswagen manufacturer VOW3,
preferred shares extended their run to a new six-year high, rising 2%. Porsche Automobil Holding PAH3,
which is the majority controlling shareholder of Volkswagen, gained 5%. Hopes about Volkswagen’s electric vehicle ambitions were fueled by the presentation of the company’s battery earlier in the week.
Sartorius SRT,
the supplier of pharmaceutical and laboratory equipment jumped 10% after increasing sales and margin guidance for the year, citing strong first 10 weeks of 2021.
Fevertree drinks FEVR,
the shares plunged up to 11%, after the tonics manufacturer pointed to worse margins than the market expected.
Zur Rose ROSE,
the Swiss pharmacy chain, which benefits from Germany’s move to online delivery, fell 8% as it said it could exceed 4 billion francs in sales “at the beginning” of a three to five year window, and balance in 12 to 18 months after 2021.