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European Bourses Edge Up; Bank of England Raises Rates, Expects 13% Inflation

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Last updated: 08/04/2022 12:27:09

12:27 PM EDT, 08/04/2022 (MT Newswires) -- European stocks ended with small gains for a second consecutive day on Thursday, while the Bank of England raised rates and said it expects higher inflation and an economic contraction to start by the end of the year.

Stoxx Europe 600 added 0.18%, London's FTSE 100 edged up 0.03%, the Swiss Market Index increased 0.21% and France's CAC and Germany's DAX respectively gained 0.08% and 0.55%.

The Bank of England warned of a Q4 recession in Britain as it raised its key interest rate by 50 basis points, a 27-year high, to 1.75% at its August meeting on Thursday. Meanwhile, energy prices are expected to further worsen the country's cost-of-living crisis, as the central bank said it expects inflation to reach 13% in Q4. Its current estimate is for inflation to start falling in 2023 and come back closer to its 2% target in two years.

BOE Governor Andrew Bailey said that while "all options are on the table" for the September meeting, the aggressive rate jump does not suggest similar moves in the future.

In the eurozone, S&P Global data showed a decline in July productivity and construction. The S&P Global Europe Sector PMI in July also fell, with 17 sectors out of 20 posting lower output.

In corporate news, Glencore's (GLEN.L) London shares gained 3.07% at close after the Anglo-Swiss commodities giant reported an H1 earnings surge and $4.5 billion in shareholder returns. Meanwhile, Bayer (BAYN.F) was in the red by 2.52% despite bumper H1 results and a FY outlook upgrade, as it revealed a Q2 694 million-euro ($708.9 million) hit from ongoing settlement negotiations in the US for legacy Monsanto PCB products.

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