The Dow lost over 600 points at the opening bell on Thursday, while the S&P 500 and Nasdaq plunged by 2.5% and 4%, respectively, as yesterday's Fed-induced relief rally ran out of steam and investors refrained from placing big bets before Friday's jobs data. The market moves came after the Fed hiked its benchmark policy rate by half a percentage point for the first time since 2000, sending a strong signal that it intended to do so again at the next two meetings. On the data front, nonfarm labor productivity in the US slumped an annualized 7.5 percent in the first quarter of 2022, much more than market expectations and the most since 1947. Adding to the gloomy mood, Etsy and eBay dropped 16% and 8%, respectively, after issuing weak revenue guidance, and Shopify fell 18% after missing estimates.
European stock indices rose sharply on Thursday, with Germany’s DAX up 1.6% and the pan-European Stoxx 600 adding 1.3%, in a busy session with US Fed and BoE interest rate decisions to digest and a large batch of corporate earnings. Among airliners, Lufthansa nearly halved Q1 net losses on soaring passenger numbers, while Air France KLM posted bumper earnings and expected a strong summer season. Lastly, oil giant Shell Q1 profits surged to a 14-year high.
The FTSE 100 climbed 1.3% on Thursday, a sharp rebound from a 0.9% decline in the previous session to levels not seen in two weeks, keeping its bullish momentum after an expected 25 bps rate hike to 1% by the Bank of England. Earlier, remarks from Fed Chairman Powell ruling out more aggressive 75 bps rate hikes in the future brought relief to markets, after the US central bank delivered an expected 50 bps rate hike. In individual stocks, packaging group Mondi jumped 7% after reporting strong Q1 results and an upbeat 2022 outlook, even as the firm pledges to exit its Russia operations. Also, oil giant Shell rose 3.4% after posting its highest quarterly profit since 2008, in line with market expectations, and raising dividends by 4% to $0.25 per share.
The CAC 40 index was 1.8% higher to hover above the 6,500 mark on Thursday, boosted by a dovish Federal Reserve after Chair Powell ruled out steeper interest rate hikes in the coming meetings, while investors digested a batch of corporate earnings. Airbus share surged 7.8% to lead the gains in Paris after the group announced its first quarter financial results exceeded expectations and that its outlook for 2022 is maintained. ArcelorMittal also booked gains, rising over 3.5% after higher steel prices lifted the group’s revenue during Q1. To add, Stellantis shares appreciated 3.7% due to a 12% growth in sales to €41.5 billion in Q1. On the financial sector, Societe Generale exceeded earnings expectations despite uncertainties linked to the war, while Credit Agricole recorded a 47.2% drop in net profit due to its exposure to Russia.
The FTSE MIB index rose 1.7% to the 24,300 level on Thursday, tracking American equities after Fed Chair Powell ruled out steeper interest rate hikes in the coming meetings, while investors digested a batch of corporate earnings. UniCredit shares jumped 5.7% after it remained committed to distribute €16 billion euros in dividends, despite its net profit dropping 70% y-o-y during Q1, as it booked €1.3 in provisions to offset losses of its Russian exposure. At the same time, Stellantis was 3% higher after announcing its revenue rose 12% in the first three months of the year, supported by higher pricing of vehicles to offset raw materials and semiconductor shortages. Lastly, Enel was slightly higher after confirming its financial objectives for 2022, despite strong measures by the Italian government to take back profits amid surging utility prices.
The Ibex 35 pared early gains to trade 0.6% higher around 8,550 on Thursday, after the US Fed raised rates by a widely anticipated half percentage point but sounded a less hawkish tone. Investors also continued to monitor more corporate earnings and the EU's plans to sanction Russia. On the corporate front, Spain's Fluidra surged over 5% after reporting a 12% rise in first-quarter net profit to 75 million euros and maintained its guidance for 2022.