Euro Stoxx 50 Futures Edges Above 4290.00s As ECB Raises Rates 25bps, Leaves Door Open For Further Rate Hikes

• The EU Stoxx 50 Index futures rose 0.15% on Friday during the mid-Asian session to edge back above the late 4290.00s
• The ECB Delivers a 25bps Hike, leaving the door open for further rate hikes
• Anheuser Busch Inbev (EBR: ABI) heads the list of top gainers this week, while Airbus Group (Paris: Air) heads the list of top losers

The Pan-European Stoxx 50 futures index, edged slightly higher on Friday during the second part of the Tokyo session to extend the corrective pullback from the vicinity of 4289.3 in the aftermath of the latest rate hikes by the ECB and Federal Reserve. As per press time, futures tied to the Euro Stoxx 50 index rose 0.14% to trade at $4295.5 after slipping overnight by 0.15% in after-trading hours, reversing back some of its earlier gains and eventually closing at 4289.3. The move follows a slightly better day across Europe and Wall Street as the two of the world's Major Central Banks hiked their overnight lending rates to levels last seen in a decade and left the door open for further rate hikes.

Following the two central banks' interest rate decisions, with the latest being the ECB interest rate decision, the euro plus the European treasury bond yields slipped to their lowest level in a day while the Pan-European Stoxx 50 Index rose more than 0.7%, with stocks from Consumer Staples, Consumer Discretionary and Health Sectors providing the most muscle to push the EU 50 index to one of its best days this year before eventually retreating later during the late new york trading session. The European Central Bank on Thursday raised its key interest rates by 25 bps to 3.75% during its May meeting in line with market expectations, noting that inflation is still too high and underlying pressures persist. The central bank also announced plans to discontinue the reinvestment of cash from maturing bonds purchased under the €3.2 trillion APP from July. Meanwhile, President Lagarde told a news conference that the ECB had more ground to cover and was not pausing the rate-lifting cycle anytime soon.

Noteworthy, the latest economic data revealed that the inflation rate in the Euro Area rose to 7% in April, with the core rate remaining close to March's all-time high of 5.6%. During Thursday's meeting, a surge in inflation had already cemented market expectations of further rate increases. Furthermore, recent data from the Bank Lending Survey showed signs that tightening is beginning to filter through the economy, so the latest interest rate decision was no surprise to investors.

The latest ECB interest rate decision came a day after its counterpart across the Atlantic, the Federal Reserve, raised its Fed Fund Rates by 25bps to 5%, signalling a potential end to hikes.

Top Gainers and Losers for the Week

Here are this week's top Euro Stoxx 50 index movers, a week in which the index is set to close with modest gains.

Top Gainers

• Anheuser Busch Inbev (EBR: ABI): The Belgian beer company's stock rose 0.4% on Thursday after the world's largest brewer reported higher-than-expected earnings, helped by sharply higher prices. The company's stock price was up 2.50%/1.45 points on Friday to trade at €59.48

• BMW ST (EBR: BMWG): The German automotive company's shares were up 2.75% on Friday after the carmaker reported a higher earnings margin for its cars segment, at 12.1% from 8.9% a year earlier, but kept its outlook unchanged in the face of ongoing high costs and rising competition.

Top Losers

• Airbus Group (Paris: Air): The France-based jet manufacturer's stock slid 1.85%/2.30 points on Friday, weighed down by poor earnings results after it posted adjusted quarterly operating earnings of 773 million euros ($854 million), down 39%, as revenues dipped 2% to 11.763 billion euros.

Technical Outlook: Four-Hour EU 50 Stoxx Index

From a technical standstill, a further increase in buying pressure will uplift spot prices toward the 4300.00 psychological mark en route toward confronting the technically strong 200 (yellow) day Exponential Moving Average (EMA) at 4306.1 level. A convincing move above these levels could negate any near-term bearish outlook and pave the way for aggressive technical buying. The bullish trajectory could then be extended toward the key resistance level plotted by a descending trendline extending from the late April 2023 swing high. A four-hour candlestick close above this level would set the EU50 index for a northbound move toward confronting the 4325.0 resistance level. A decisive flip of this resistance level into a support level would set the stage for further EU50 Index gains.

On the flip side, if bears outpower bulls and force a bearish reversal, supported by the fact that the price is still trading below the 200-day EMA and the RSI (14) is still in bearish territory, the price will first find support at the 4288.5 support level. A breach of this floor would expose the EU50 index to the next relevant support level at 4270.9. On further weakness, the focus shifts toward the 4262.5 key support level.