European markets closed higher on Friday. Traders eagerly and hopefully await the decisions of the European Central Bank and the Bank of England on the key interest rate.
The pan-European Stoxx 600 rose 0.1% to 435.62 points.
French CAC 40 gained 0.46%, German DAX gained 0.74% and British FTSE 100 gained 0.06%. At the same time, the British index was down 1.05%, the French one lost 0.96% and the German one dropped 1.09% in the trading week. The key reason for the pessimism on the European markets was investor fears about the prospects for the global economy.
Leaders of growth and decline
The share price of Associated British Foods, a British multinational food processing and retailer, fell 0.8%. According to the retailer's updated annual forecast, the company's revenues will increase significantly in fiscal 2022, however, it projects a decline in adjusted operating profit and adjusted earnings from fiscal 2021.
British oil and gas company British Petroleum was down 1%.
The share price of the British-Dutch energy giant Shell fell by 1.5%.
The share price of Australian-British mining and metallurgical concern Rio Tinto increased by 2%.
British Berkeley Group Holdings rose 0.4% despite the decline in pre-tax profit and revenues in the first fiscal half of the year.
Man Group Plc, a London-based investment company, soared 5.3% as it announced a new share buyback program of up to $125 million.
The share price of German medical equipment manufacturer Carl Zeiss Meditec plummeted 6.9%.
Market sentiment
On Friday, European investors were anxiously anticipating the upcoming ECB and BoE key interest rate meetings.
On Tuesday, the Reserve Bank of Australia raised its official cash rate to 3.1%, a 10-year high. In addition, representatives of the central bank reiterated forecasts of the need for further rate hikes in order to curb record levels of inflation.
Next week the ECB and the BoE will hold meetings on monetary policy. Markets forecast that both central banks will raise the interest rate on the backdrop of the permanent growth in inflation. Thus, earlier in his interview to the Italian newspaper Milano Finanza, ECB Chief Economist Philip Lane said consumer-price growth is probably near its zenith.
The ECB raised all three key ECB interest rates by 75 basis points. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 2.00%, 2.25% and 1.50% respectively. Most analysts expect the ECB to increase the lending rate to at least 2% from 1.5% at its December meeting.
In addition, the US Federal Reserve will announce its monetary policy decision on December 14.
Recall that last Wednesday Fed Chairman Jerome Powell spoke at the Brooking Institute Hutchins Center on fiscal and monetary policy.
In his statement, the head of the central bank signaled a potential easing of monetary policy and a slowdown in future interest rate hikes on the back of more favorable data on inflation in America.
The minutes of the Fed's November meeting were released last Friday. According to the document, the majority of the Fed leaders considered it reasonable and appropriate to slow down the central bank's interest rate hike in the near future.
According to the world's leading derivatives marketplace CME Group, to date, 71.1% of analysts expect to raise the interest rate at the December meeting by 50 points - to 4.25-4.5% per annum.
Recall that the central bank raised interest rates by 75 basis points in October for the fourth consecutive meeting. The rate is currently at its highest level since January 2008, at 3.75-4.00% per annum.
At the end of next week, Eurostat will publish its final estimate of annual inflation in the euro area at the end of last month. According to experts' preliminary forecasts, consumer price growth fell to 10% in November from October's 10.6%.
As for news from the United States, the country's Producer Price Index for last month will be released next week. According to preliminary forecasts of analysts, growth of the index in annual terms will fall to 5.9% in November from October's 6.7%.
Moreover, next week the key report on the Consumer Price Index (CPI) in America will be released, which may affect the Fed's next steps in the sphere of monetary policy.
Trading results the day before
On Thursday, the leading stock exchange indicators of Western Europe closed in the red zone.
The Stoxx Europe 600 was down by 0.17% - to 435.47 points. The indicator showed a drop for the fifth consecutive session.
French CAC 40 lost 0.2%, German DAX gained 0.02% and British FTSE 100 fell by 0.23%. At the same time, Britain's FTSE 100 falls for a third straight session, while the French one for the fifth.
The share price of British American Tobacco, a major cigarette and tobacco manufacturer, sank by 2.9%. The day before the company said it expects net finance costs to increase.
DS Smith, the British multinational packaging business, soared 2.1%. Earlier, the company raised its interim dividend and forecast a stronger-than-expected annual performance on the back of rising packaging prices and strong demand from suppliers of consumer goods.
Swiss locomotive and railcar maker Stadler Rail AG fell 4.5%.
The share price of Aroundtown S.A., a Luxembourg-based real estate company, fell 7.2%.
Irish low-cost carrier Ryanair Holdings PLC rose 1.4% on news of the contract extension with chief executive Michael O'Leary until July 2028.
London Stock Exchange Group quotes fell by 6.6%. The day before, analysts from the Swiss financial holding UBS downgraded the exchange operator to neutral from buy.
