European stock markets make gains after Bank of Canada rate rise

Europe’s leading markets finished higher on Wednesday after a dovish rate hike by Canada’s central banks helped drive positive sentiment.

The FTSE 100 was among markets to close higher as strength among commodity firms helped to offset the impact of the strong pound.

London’s top index ended the day up 42.59 points, or 0.61%, at 7,056.07.

Michael Hewson, chief market analyst at CMC Markets UK, said: “It was looking set to be another mixed bag of a day for markets in Europe, until 3pm when the Bank of Canada raised rates by a less-than-expected 50 basis points to 3.75%, in a move that suggests that central banks are starting to wake up to the possibility that too aggressive rate rises could do more harm than good.

“It’s also got markets asking the question, could the Fed follow suit next week after another poor set of housing numbers from the US.

“A jump in basic resources saw the FTSE 100 rebound back into the black as the US dollar slid, and copper and crude oil prices surged higher, helping to lift the mining heavyweights.”

On the continent, the other main markets were also higher as the Bank of Canada rate decision provided an uplift in the second half of trading.

The German Dax improved 1.04% by the end of the session and the French Cac finished 0.43% higher.

Across the Atlantic, sentiment was mixed with the Nasdaq witnessing losses after both Microsoft and Alphabet posted disappointing trading updates.

Meanwhile, sterling hit a fresh six-week high on Wednesday as confidence continued to return due to calming rate rise expectations.

The pound was up 1.1% against the dollar at 1.159 and was 0.18% higher against the euro at 1.152 at the close.

In company news, Dettol maker Reckitt slipped in value after it revealed lower sales volumes over the past quarter.

The company said total revenues were higher but these were driven by changes to product prices and the mix of items being purchased.

Shares in Reckitt finished the day 244p lower at 5,722p.

Banking giant Barclays moved slightly lower at the close despite posting profits ahead of forecasts.

The FTSE 100 firm told shareholders that profits lifted to £2 billion over the latest quarter, amid a fixed income boom, which surged by 63% to £4.7 billion for its international division, as its clients upped trading during the recent period of market volatility.

It was down 0.4p at 149.82 at the end of trading.

Fellow finance firm Standard Chartered was among the day’s weakest performers after its bad debt provisions grew amid continued caution over the Chinese market from investors.

It meant that shares moved 28.4p lower to 526o despite a better-than-predicted rise in profits.

The price of oil moved higher as it also benefited from the belief that interest rate hikes are slowing down.

Brent crude oil increased by 2.32% to 95.61 US dollars per barrel when the London markets closed.

The biggest risers in the FTSE 100 were Antofagasta, up 81p at 1,227.5p, Fresnillo, up 30.8p at 745p, Anglo American, up 114p at 2,772.5p, Rightmove, up 19.4p at 508.8p, and Kingfisher, up 8p at 221.2p.

The biggest fallers of the day were Standard Chartered, down 28.4p at 526p, Reckitt, down 244p at 5,722p, Coca-Cola HBC, down 49.5p at 1,904p, Whitbread, down 48p at 2,574p, and Haleon, down 4.8p at 268.3p.