30th Jul 2026 09:27
(Alliance News) - Stock prices in Europe opened mixed on Thursday, as traders digest a hawkish hold by the Federal Reserve, and a bumper day of corporate earnings.
The FTSE 100 index rose 38.12 points, 0.5%, at 10,946.53 on Thursday. The FTSE 250 added 66.83 points, 0.3%, at 24,063.64, and the AIM all-share fell just 0.19 of a point at 761.66.
The FTSE 100 hit a new high of 10,956.60 on Thursday.
The Cboe UK 100 rose 0.4% at 1,086.75, the Cboe UK 250 climbed 0.5% at 20,957.64, and the Cboe small companies was 0.2% lower at 18,651.34.
In Frankfurt, the DAX 40 fell 0.4%. The CAC 40 in Paris was up 0.4%.
In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average down 2.2%, the S&P 500 down 1.5% and the Nasdaq Composite down 1.7%.
In Asia on Thursday, the Nikkei 225 index in Tokyo rose 0.7%. In China, the Shanghai Composite fell 0.6%, while the Hang Seng index in Hong Kong was 0.2% higher. The S&P/ASX 200 in Sydney ended down 0.8%.
Federal Reserve Chair Kevin Warsh on Wednesday said the central bank will not waiver in its fight to bring inflation back to target and that higher interest rates can be part of the solution.
The decision, which was expected, leaves the federal funds rate target range at 3.50-3.75%, and marks the Fed's fifth consecutive meeting without a change in rates.
"You have heard this before but we will deliver price stability," the Fed Chair said in a press conference. He said the Fed has a "laser" focus and is "on the case", but stressed there is no "magic wand" in getting inflation on target.
The "pathway to central heaven demands delivering on our remit," he quipped.
Warsh was speaking after the Federal Reserve left interest rates on hold, in a split vote, with three officials pushing for a rate increase.
Warsh said while the vote was divided there was overwhelming agreement on the judgement of how best to achieve price stability.
Nine members of the 12-strong Federal Open Market Committee backed the decision for the status quo, but Beth Hammack, Neel Kashkari, and Lorie Logan argued for a quarter point rate hike.
Despite the slightly hawkish slant to the decision, the dollar struggled. Sterling rose to USD1.3344 on Thursday from USD1.3284 at the time of the London equities close on Wednesday. Against the euro, however, it eased to EUR1.1656 from EUR1.1673.
The euro rose to USD1.1441 on Thursday from USD1.1380 late Wednesday afternoon. Versus the yen, the buck fell to JPY163.69 from JPY163.85.
There was some divergence among US Treasuries. The 2-year and 5-year yields ebbed after the Fed decision, to as low as around 4.22% and 4.35% respectively on Thursday, from daily highs of around 4.34% and 4.42% before the Fed rate decision.
But the 10-year and 30-year yields hit their highs for the day on Thursday in the aftermath of the rate decision, albeit after easing immediately after the decision.
The yield on the 10-year US Treasury widened to 4.70% early Thursday from 4.64% at the time of the London equities close on Wednesday, while the 30-year yield stretched to 5.23% from 5.12%.
"The sell-off in the long end of the Treasury market, pushing mortgage rates to new highs, will keep the Fed on its guard," analysts at ING commented.
"Last night's FOMC press conference was a little confusing. Looking at the market's reaction, the conclusion was that the Fed was not going to be as tough on fighting inflation as initially thought and might try to wriggle through this period of high inflation without hiking. Chair Kevin Warsh's celebration of higher real yields and the more 'direct' message from the markets was taken as a view that the Fed had outsourced monetary tightening to the markets, reducing the need for hikes. To be honest, we are not sure if that is the correct read or whether Warsh implicitly acknowledged that higher real rates embodied an expectation that the Fed would hike in September."
Thursday is the turn of the Bank of England, which announces a rate decision at midday. The BoE is expected to hold.
Analysts at Deutsche Bank commented: "Our UK economists expect a 7-2 vote split with Chief Economist Huw Pill and external MPC member Megan Greene opting for a 25bps hike. Markets will focus on the chances of a rate hike at the upcoming meetings, with a hike by September currently 60% priced. Our economists currently expect the BoE to stay on hold this year, though they do see risks of a hike in the event of a more persistent energy price shock or a pickup in wage growth."
The BoE decision is at midday, while elsewhere on Thursday, the economic calendar has a eurozone gross domestic product reading at 1000 BST, German inflation data at 1300 BST, before US growth data and a personal consumption expenditures reading at 1330. The PCE reading will be in focus following Wednesday's Fed decision.
Analysts at Barclays noted: "From the presser, we learned that the FOMC will still target PCE price inflation at 2% for now, and that post-meeting press conferences will continue at least through end-2026."
Thursday has also been a busy day for corporate earnings in Europe, with jet engine maker Rolls-Royce leading the charge on the FTSE 100, rising 3.9% after a guidance hike.
Oil major Shell announced a second quarter profit beat and new USD3.0 billion buyback. Shares rose 1.6%.
But Rentokil slumped 17% as it reported stronger half-year profit but the pest control and hygiene firm warned of "some weakness in North America Residential lead flow towards the end of Q2 and into July".
Packaging firm Mondi was the best FTSE 250 performer, adding 17% despite reporting a swing to a half-year loss.
"Trading momentum improved through the first half and we enter the second half with higher packaging paper prices, supported by good order books," Chief Executive Officer Andrew King said, however.
Vanquis Banking slumped 23%. The lender said an "uncertain macroeconomic backdrop resulted in more cautious consumer behaviour". This led to "lower than expected spending and utilisation from existing credit card customers".
"While uncertain, for now we are assuming this spending caution persists and we therefore intend to continue to drive greater volume of high quality balance growth through new customer acquisition. This will moderate returns in 2026 and 2027, but position the group for stronger profitability beyond the near term impact. We now expect a low single digit return on tangible equity in 2026, a low double digit return in 2027 and a mid-teens return in 2028," it added.
It had previously expected a "low double-digit" RoTE for 2026. Its 2027 view was lowered from the "mid-teens".
Over in mainland Europe, adidas was in focus. Shares slumped 16%. The sportswear firm hailed a "record" second quarter, with sales surging 14% on a currency neutral basis. Operating profit rose 5% to EUR574 million, but RBC noted this was 8% below consensus amid EUR212 million worth of marketing spend which adidas said it put towards "successful World Cup campaigns and activations".
A barrel of Brent rose to USD92.40 on Thursday morning from USD90.09 at the time of the London equities close on Wednesday. Gold rose to USD4,045.72 an ounce from USD4,011.17.
The US military completed a "heavy wave of strikes" against Iran on Thursday in retaliation against Tehran targeting American bases in Jordan, as fighting intensified in the Middle East war after a nearly week-long pause.
The reignited hostilities have drawn in the Islamic republic's proxies, and appear to have dashed hopes of a quick return to negotiations between the foes.
US President Donald Trump had vowed to hit Iran "hard" after Tehran launched missiles at Jordan, its first regional strike in days.
American forces "successfully completed a heavy wave of strikes against Iran", and struck dozens of Islamic Revolutionary Guard targets including military command centres, US Central Command, CENTCOM, said.
By Eric Cunha, Alliance News news editor
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