Volkswacht Bodensee - Stock markets rally as traders see end to rate hikes

The Fed, as expected, raised borrowing costs once more on Wednesday as it seeks to bring inflation down further, while analysts are forecasting it will pause going forward.

European Central Bank policymakers then delivered another interest rate increase of their own Thursday, also as expected, with eurozone consumer prices still rising fast.

But ECB chief Christine Lagarde sent dovish signals, leaving open the possibility of a pause in its streak of rate hikes as the eurozone's economic outlook has deteriorated.

Stock markets on both sides of the Atlantic liked that prospect, with Frankfurt setting a record close, while the euro fell after the ECB announcement.

"We've seen a strong session ... as investors increasingly adopt the view that central banks could be done when it comes to further rate hikes, while the latest set of US economic numbers pointed to a goldilocks scenario for the US economy," said analyst Michael Hewson at CMC Markets.

- Bullish stride -

US Fed chief Jerome Powell also said he was optimistic that the world's top economy could dodge a recession, a situation many had bet on earlier in the year.

Data out Thursday showed that the US economy confounded expectations with growth accelerating in the second quarter this year.

GDP growth in the world's biggest economy came in at an annual rate of 2.4 percent for the April-June period, above analyst expectations and rising from the two percent rate in the first three months of 2023.

Meanwhile, first time jobless claims came in below expectations and June durable goods orders came in stronger than expected, also showing the resilience of the US economy in the face of higher interest rates.

"It is all good for the stock market this morning -- or at least it feels that way," said Briefing.com analyst Patrick O'Hare.

The market has maintained its "bullish stride, underpinned by good vibes related to earnings, the economy, and monetary policy in addition to a fear of missing out on further gains."

On the corporate front, traders continued to assess earnings, with Facebook parent Meta beating market expectations rebounding spending on digital ads.

Shares in Meta climbed 7.5 percent in morning trading in New York.

Samsung Electronics posted plunging profits on weak demand for memory chips, while energy majors including Shell and TotalEnergies also revealed heavy earnings falls after oil and gas prices retreated.

Friday sees the Bank of Japan decide over its monetary policy.

Investors are also keeping an eye on China after it announced plans to provide support to key parts of the world's second-biggest economy, particularly the struggling property sector, after a string of weak data showing the post-Covid recovery had run out of steam.

- Key figures around 1530 GMT -

New York - Dow: UP less than 0.1 percent at 35,553.19 points

London - FTSE 100: UP 0.2 percent at 7,7 (close)

Frankfurt - DAX: UP 1.7 percent at 16,406.03 (close)

Paris - CAC 40: UP 2.1 percent at 7,465.24 (close)

EURO STOXX 50: UP 2.3 percent at 4,447.44 (close)

Tokyo - Nikkei 225: UP 0.7 percent at 32,891.16 (close)

Hong Kong - Hang Seng Index: UP 1.4 percent at 19,639.11 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,216.67 (close)

Euro/dollar: DOWN at $1.0994 from $1.1089 on Wednesday

Pound/dollar: DOWN at $1.2861 from $1.2943

Euro/pound: DOWN at 85.46 from 85.65 pence

Dollar/yen: UP at 141.06 yen from 140.34 yen

Brent North Sea crude: UP 1.3 percent at $83.98 per barrel

West Texas Intermediate: UP 1.6 percent at $80.00 per barrel

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K.Thomson--BTB