European Stocks Rise Ahead of ECB Rates Decision; Barclays Sinks

European stocks gained on a busy day of earnings reports and ahead of an interest rates decision from the region’s central bank, while traders increasingly bet that the Federal Reserve is close to the end of its tightening cycle. Barclays Plc shares slumped after its second-quarter trading revenue fell 41%, Bloomberg reported.

The Stoxx Europe 600 climbed 1.1% by 10:13 a.m. in London. Media and technology stocks stocks outperformed while energy stocks were in the red. Shell Plc shares declined after second-quarter profit fell from the highs seen last year, offsetting its pledge of additional share buybacks and a higher dividend.

Among a flood of companies which reported results, Nestle SA advanced, among the top gainers on the benchmark, after it inched up its revenue guidance. Meanwhile, Airbus SE dropped following the company’s decision to remove its target for raising aircraft production past pre-Covid levels and shift the focus to a longer-term goal.

Beyond the earnings rush, markets are digesting comments from Fed Chair Jerome Powell who signaled any further tightening would be data dependent. The central bank lifted borrowing costs at its policy meeting on Wednesday for the 11th time since March 2022 to curb inflation.

The ECB is widely expected to follow the Fed with a 25-basis points hike. What’s more in focus is any insight on whether policymakers will raise again when they next convene in September, or whether they’ll refrain.

“The Fed raised interest rates as expected but Jerome Powell’s press conference was rather dovish so that we expect no more rate hikes going forward,” said Joachim Klement, head of strategy, accounting and sustainability at Liberum Capital. “We expect the ECB to hike interest rates by 25 basis points today before pausing. We think inflation in the euro zone will continue to drop and core inflation will top out so that more rate hikes after today seem unlikely.”

The Stoxx Europe 600 is set for a second month of gains as traders assess the path of the economy, interest rates and earnings. While the S&P 500 has outperformed the European benchmark so far this year, the trajectory of earnings estimates shows that Europe still has room to run.

European banks after the Federal Reserve raised interest rates by a quarter-point and before the European Central Bank is set to follow with an increase of the same amount