European markets edged cautiously higher on Monday, rebounding from a losing week, as hawkish comments from major central banks signaled further monetary tightening in 2023.
The Stoxx 600 closed 0.25% higher, with all major exchanges closing in positive territory. Oil & gas stocks led gains, closing up 1.7%, followed by insurance stocks, up 0.7%.
The European Central Bank on Thursday raised its benchmark interest rate to 2% from 1.5% and said it would trim its balance sheet by around 15 billion euros ($15.9 billion) each month from March 2023 through the end of the second quarter. The ECB said rate hikes must continue “clearly at a steady pace”.
The Bank of England and the Swiss National Bank struck a similar note, also opting for a 50 basis point hike, in line with the US Federal Reserve’s decision on Wednesday. Fed Chair Jerome Powell also indicated that the central bank’s efforts to contain inflation are far from over, saying policymakers “have to stick with it.”
The moves sent the Stoxx 600 into two straight sessions of sharp losses, taking the European blue-chip index to a nearly five-week low.
Markets in Asia-Pacific fell overnight on Monday as traders struggled to shed recession fears while Chinese officials vowed to stabilize the country’s economy in 2023 and maintain ample liquidity in financial markets.
US stock futures in the US edged higher in early premarket trade Monday after Wall Street’s key averages posted a second straight week of losses for the first time since September.