Last checked at 
STOXX 600 up 0.7%
*
Markets welcome Fed message
*
Eyes on ECB, BoE policy decisions
*
U.S. stock futures rise
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at
UK SUPERMARKETS' 2023 CHALLENGES (1120 GMT)
An index comprising UK food retailers had its biggest annual decline since 2015 last year.
The outlook for 2023 for names like Sainsbury, Tesco and Ocado remains much of the same and this means the space still faces challenges but also opportunities, HSBC analysts say.
Considering that food inflation in the UK has surged to 16.8% in December from a 4.3% in January 2022, markets have been behaving rationally "with input cost inflation passed on to consumers by way of higher prices at the expense of volumes".
"At the same time, UK grocers have shown great flexibility via changes in assortment, improved loyalty and cost savings programmes reinvested on behalf of consumers".
Larger supermarkets - like Tesco, Sainsbury and Asda - "passed on a 'a bit less' inflation 'a bit later' than the competition, to the benefit of share gains".
Looking ahead, HSBC expects a recession in the UK and CPI inflation to soften a little to 7.5% in 2023, down from 9.1% in 2022.
"This means elevated inflation is likely to remain a challenge in 2023, but one that grocers with scale can use to their advantage".
STOXX GETS TECH UPLIFT, BANKS TAKE A BREATHER (0910 GMT)
Price action in Europe is telling, with traders playing dovish signals from the Fed. So tech is on the up and banks are taking a breather, despite mostly positive earnings.
Tech, which suffered heavily last year from big U.S. rate rises, is by far the top gainer across the STOXX, up 3% to fresh 10-month highs, also buoyed by investors warming up again to Facebook parent Meta after a big share buy-back.
Banks instead are down 0.3%, making this the weakest sector in Europe, dragged lower by ING and Deutsche Bank following results from the two heavyweights, and ahead of another round of rate hikes in the euro zone and UK.
The good vibes stemming from a less aggressive outlook for U.S. monetary policy meanwhile are boosting several country benchmarks to new highs, while squeezing a gauge of euro zone equity volatility to its lowest since November 2021.
The STOXX 600 was last up 0.8%, closing in on the April 2022 highs hit in January. There's also a new milestone for Spain's IBEX which has hit June 2021 levels, up 1.3%.
Here's your opening snapshot:
EUROPE HEADS HIGHER AHEAD OF ECB AND BOE (0746 GMT)
Dovish signals from the Fed and an upbeat forecast from Facebook parent Meta have injected fresh optimism into markets, with the good mood spilling over to Europe ahead of keenly awaited policy decisions at the ECB and BoE later in the day.
EuroSTOXX50 futures were up 0.8% and FTSE contracts gained 0.5%, pointing to a firmer open for Europe after Wednesday's muted session ahead of the Fed.
Meta's Frankfurt-listed shares rallied 18%, tracking U.S. after-hours gains after the company forecast Q1 revenues above market expectations and announced a much-welcome $40 billion new share buy-back programme.
It's a busy day for earnings in Europe too, especially in the banking sector. Santander, ING, Nordea and Deutsche Bank are all releasing their numbers and they could prove decisive in pushing the banking index to new highs.
Santander booked a record 9.6 billion euro profit for 2022 and Deutsche Bank profit growth exceeded expectations, helped by higher rates and buoyant trading. Nordea and ING also beat market expectations. These banks weigh a combined 34% on the EuroSTOXX bank index.
Big Oil is also in the spotlight after hell delivered a record $40 billion profit in 2022 and said it would repurchase $4 billion in shares.
MARKETS GO ALL IN FOR DISINFLATION (0653 GMT)
Push back? What push back? The main theme ahead of the Fed announcement was that Chair Jerome Powell would definitely, totally, absolutely push back against the recent rapid easing in market conditions given inflation was still sky high.
Instead, Powell seemed to go out of his way to do the opposite. The very first question in the new conference invited him to scold markets, and he notes conditions had tightened a lot last year.
Given another opportunity, he says he's "not particularly concerned" about market pricing, and later "I'm not going to try to persuade people that have a different forecast" on inflation and policy.
Yes there were caveats about it being too early to declare victory and policy will need to be more restrictive. But even then he was blase about another "couple of hikes", and spent more time trying out his new favourite word "disinflation".
A pdf search of the conference shows disinflation or disinflationary was used 13 times, compared to twice at his December event. For sure, service inflation had yet to turn the corner, but he expected to see that "fairly soon."
For markets, this is like stealing the last cookie in the cookie jar, getting caught red handed, and, instead of a good spanking, you get another cookie, with chocolate on.
So of course Treasuries rallied, with 10s down 9bp and 2s 10bp in the wake of the conference and a bit more in Asia. Next targets are the Jan lows at 3.321% and 4.04%.
Fed funds partied by pricing in more rate cuts with Fed funds seen at 4.40% by end 2023 and 3.0% by the close of 2024.
The euro jumped to a 10-month peak of $1.1034 and could go further if ECB chief Christine Lagarde sounds as hawkish as everyone seems to expect after today's policy meeting.
The market is almost fully priced for a hike of 50bp and the promise of more to come, though it was notable that Euribor rallied overnight to imply deeper cuts next year.
The ECB is also set to reveal how exactly it plans to reduce the multi-trillion euro stock of bonds on its balance sheet.
Across the Channel, the Bank of England is also seen hiking 50bp today, though with some outside risk of 25bp.
The following media conference by Governor Andrew Bailey and colleagues is likely to be a tough one, assuming they can even get to it given all the strikes.
The IMF, and many others, are predicting recession but inflation is at 10.5% and wage growth running red hot - good luck squaring that circle.
For Wall Street, it's a massive earnings day and Meta helped overnight by announcing a $40 billion buy-back that sent its shares up 18%.
Healthcare companies BristolMeyers-Squibb Co, Eli Lilly and Co and Merck & Co are due to report before trading commences on Wall Street.
The heavy-hitting trifecta of Apple Inc, Amazon.com and Alphabet Inc are after the bell.
Key developments that could influence markets on Thursday:
- BoE rate decision is at 1200 GMT and the ECB at 1315 GMT. BoE Gov Bailey speaks to reporters at 1230 GMT and ECB President Lagarde at 1345 GMT
