Big Cap Stocks in Heat: How European Shares are Dipping  

Following the Fed’s announcement of what many called a “hawkish pause” in its 17-month tightening cycle, European shares appeared to open slightly lower on Thursday. This was in anticipation of an upcoming 25-basis point boost by ECB policymakers.

After a volatile Wall Street close on Wednesday and modest overnight advances in Asia, the EuroSTOXX50 and FTSE futures decreased by about 0.4%, supporting additional assistance for big Cap stocks. For the first time in ten months, China’s central bank reduced the borrowing cost for its medium-term policy loans, another indication that Beijing is concerned about the economy’s brittleness. 

Meanwhile, EuroSTOXX bank futures declined 0.3%, generally in line with a weaker big Cap stocks market. Even though central banks remained the primary topic of discussion — the ECB decision and President Lagarde’s news conference are both scheduled for 12:15 GMT — some dealmaking activities might liven up the European session. Bain Capital made a $3.2 billion bid for the SoftwareOne software management company.

Big Cap stocks like Hugo Boss also sent out a positive message by raising their 2025 sales target in anticipation of robust demand across all of its territories, while H&M marginally underperformed forecasts for its March-May sales due to exceptionally chilly weather. 

Investors may afford to be comfortably ahead of the European Central Bank’s policy announcement later on Thursday after being shaken overnight by the hawkishness surrounding the Fed’s pause. The ECB will undoubtedly announce its eighth consecutive rate increase of 25 bps and confirm that the pace of quantitative tightening will quicken. 

In general, they may raise rates again in July and September, placing the fight against inflation ahead of the slowdown in economic growth. Although macroeconomic forecasts are also expected, Christine Lagarde, the president of the ECB, is adamant that “there is no clear evidence that underlying inflation has peaked.” 

Never say never, but according to ING, markets are “priced to perfection” for an ECB rate increase on Thursday and at least two more. The Fed maintained its benchmark funds rate window at 5-5.25%, and Chairman Jerome Powell stated that the next move would depend on the availability of new economic data. The market moved short-term U.S. rates higher and closed out bets on any cuts in 2023 due to the Fed’s dot plot’s projection of two additional 25 basis point hikes this year.