Stocks were mostly lower in Europe and little changed on Wall Street Wednesday as UK inflation slowed less than expected, dousing hopes of a quick Bank of England rate cut.
London stocks sank and the pound jumped on news that Britain’s Consumer Prices Index rose 2.3 percent in April, slower than the previous month but outpacing analyst expectations of 2.1 percent.
“This was disappointing news, and the markets moved quickly to price out hopes of a June rate cut. It now looks as if September is most likely,” said David Morrison, senior analyst at Trade Nation.
“European stock indices are down again, shrugging off last night’s record closes for the S&P 500 and NASDAQ 100,” he said.
The UK inflation news comes on top of statements from US Federal Reserve members suggesting they need to see more proof that inflation is under control before cutting rates.
“Investors are now looking for the Fed to cut rates by 40 basis points by year-end, versus 56 bps by the Bank of England and 67 bps by the European Central Bank,” said Luca Santos, currency analyst at ACY Securities.
In New York, the Dow and the wider S&P were down marginally after their opening, while the tech-heavy Nasdaq was little changed.
US shares were largely on hold ahead of a Wednesday earnings update from Nvidia — the third-largest US company by market capitalisation — which is sometimes seen as a gauge of overall market sentiment.
The chip-maker’s stock price is up 90 percent in 2024 with the high-end processors prized by firms looking to get ahead in the booming artificial intelligence sector.
However, there is a worry that the figures do not match sky-high expectations, which some observers say could spark a sell-off, particularly among market-heavyweight tech firms.
“The market is geared up to hear what Nvidia reports, but more to the point, it is geared up to see how Nvidia trades after the report and the effect that has on the broader market,” said Patrick O’Hare, an analyst at Briefing.com.
Paris and Frankfurt indices dropped with sentiment also subdued after a mixed session in Asia.
Shares of food-to-clothing retailer Marks & Spencer were up 6 percent on a strong profits report, but that was not enough to pull London’s overall FTSE 100 Index higher.
Oil prices fell for the second day and the dollar was little changed against the euro and yen.
– Key figures around 1340 GMT –
New York – Dow: DOWN 0.1 percent at 39,882.22
New York – S&P 500: DOWN 0.1 percent at 5,317.01
New York – Nasdaq Composite: UP LESS THAN 0.1 percent at 16,838.92
London – FTSE 100: DOWN 0.7 percent at 8,355.95 points
Paris – CAC 40: DOWN 0.6 percent at 8,093.63
Frankfurt – DAX: DOWN 0.2 percent at 18,689.35
EURO STOXX 50: DOWN 0.3 percent at 5,031.92
Tokyo – Nikkei 225: DOWN 0.9 percent at 38,617.10 (close)
Hong Kong – Hang Seng Index: DOWN 0.1 percent at 19,195.60 (close)
Shanghai – Composite: FLAT at 3,158.54 (close)
Dollar/yen: UP at 156.48 yen from 156.18 yen on Tuesday
Euro/dollar: DOWN at $1.0840 from $1.0858
Pound/dollar: UP at $1.2741 from $1.2708
Euro/pound: DOWN at 85.06 from 85.41 pence
West Texas Intermediate: DOWN 1.0 percent at $77.89 per barrel
Brent North Sea Crude: DOWN 1.0 percent at $82.05 per barrel
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