Stocks and euro fall ahead of ECB rate rise. Europe’s stock markets and the euro fell on Thursday as investors awaited another European Central Bank rate hike after the U.S. Federal Reserve hinted that its marathon rising run may have ended.

Frankfurt was the focus, with gold near a record high and oil up after a rough few days.

Reuters surveyed economists anticipating the ECB to hike rates for a seventh straight meeting. However, they forecast a quarter-point increase rather than the half-point leap it has been favoring.

After the Fed did a decent job “threading the needle” on Wednesday with its quarter-point rise, Barings global equities portfolio manager Matt Ward said the ECB would be watched closely.

“I am not in the camp of expecting a shock 50 basis point hike, but it’s tough to see anything but a continuation of the hawkish tone,” he added, citing strong statistics and low unemployment in crucial nations like Germany.

Benchmark government bond rates, which set European borrowing costs, were rising, indicating a probable ECB tone.

Though fractional. Germany’s 10-year yield rose one basis point to 2.26%, down from a month earlier, while Italy’s rose two bps to 4.152%.

Piet Haines Christiansen, Danske Bank’s top fixed income strategist, said, “We’re basically in limbo right now until the decision,” which arrives at 1215 GMT.

On Wednesday, the Fed eliminated a critical phrase from its earlier pronouncements on the necessity for more rate hikes. Still, Fed Chair Jerome Powell resisted expectations that it could soon decrease them.

“It would not be appropriate to cut rates” this year since inflation will “take some time” to fall.
It came as another U.S. regional bank, PacWest Bancorp (PACW.O), reported troubles, reminding investors of some banks’ precarious health despite regulators’ assurances of containing the crisis that began with Silicon Valley Bank and Signature Bank’s collapse in March.

“The Fed decision was widely expected, so it didn’t provide much of a shock to financial markets,” said Auckland-based CMC Markets analyst Tina Teng. “However, I think the whole economic playout is not positive, especially the recent banking rout from regional banks.”

As predicted, Norway’s central bank hiked its benchmark interest rate by 25 basis points to 3.25%, ahead of the ECB, and said it would likely rise again in June and beyond if the Norwegian crown remains weak.

Carmakers and tourism drove the STOXX 600 down 0.5%.

MSCI’s 47-country world share index (.MIWD00000PUS) and Wall Street futures fell ahead of Apple (AAPL.O) results.

Asia was more optimistic (.MIAPJ0000PUS) despite Japanese holidays thinning trading this week.

China’s benchmark index (.CSI300) began down after mainland markets returned from May Day vacations but recovered to close essentially unchanged.