Wall Street stocks tried to rebound Thursday despite data showing further price pressures in the United States, while a signal by the ECB of a likely interest rate cut in June failed to pull eurozone stocks fully into the green.
The European Central Bank held interest rates steady, as expected, but said slowing inflation could open the door to easing monetary policy, raising hopes of a first cut in June.
That helped eurozone stocks pull higher, with Paris stocks breaking into positive territory although Frankfurt remained in the red. Stocks in Amsterdam and Brussels were also in the green, but fell in Madrid and Milan.
The ECB updated its guidance to say that if inflation in the eurozone keeps falling towards its 2.0 percent target then rate cuts would be appropriate. The next update in its inflation forecast is due for its June meeting.
“The ECB’s decision to update its guidance suggests that an interest rate cut at the next meeting in June is very likely,” said Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics.
Wall Street’s main indices opened higher despite data showing US wholesale prices rose at their fastest annual rate in almost a year last month.
“The key takeaway from the report is that even with the smaller than expected month-over-month increases, the year-over-year growth rates for PPI (producer price index) and core PPI accelerated,” said Patrick O’Hare at Briefing.com.
The increase in wholesale prices is likely to weigh on the US Federal Reserve, which is grappling with an uptick in inflation that threatens to undermine its largely successful battle against rising prices by hiking interest rates.
Wall Street’s main indices were hammered Wednesday by hotter-than-expected March consumer inflation figures that dealt a blow to hopes for a June rate cut. It forced traders to re-evaluate the Fed’s outlook for monetary policy, with a warning that the next move could even be a hike.
US data showed Wednesday that the consumer price index (CPI) rose 0.4 percent on-month and 3.5 percent on-year — both above consensus for the third month in a row — and observers warned the pick-up could point to a worrying trend.
It also came on the back of other data — most recently a forecast-busting jobs report — suggesting the world’s number one economy was still in rude health despite borrowing costs being at a two-decade high and inflation well above target.
The reading will give Fed officials more to mull over ahead of their May policy meeting, with their recent guidance of three rate cuts this year now in doubt.
The dollar has meanwhile surged to 153.29 yen, the strongest since 1990, on the back of the US CPI reading. Tokyo authorities have said they would keep their options open on supporting the unit.
World oil prices sagged, although Brent crude futures held above $90 per barrel as simmering tensions in the crude-rich Middle East limited losses.
– Key figures around 1330 GMT –
New York – Dow: UP 0.1 percent at 38,516.60 points
New York – S&P 500: UP 0.2 percent at 5,171.97
New York – Nasdaq Composite: UP 0.4 percent at 16,233.62
London – FTSE 100: DOWN 0.1 percent at 7,949.79
Paris – CAC 40: UP 0.2 percent at 8,062.87
Frankfurt – DAX: DOWN 0.3 percent at 18,039.05
EURO STOXX 50: DOWN 0.2 percent at 4,990.75
Tokyo – Nikkei 225: DOWN 0.4 percent at 39,442.63 (close)
Hong Kong – Hang Seng Index: DOWN 0.3 percent at 17,095.03 (close)
Shanghai – Composite: UP 0.2 percent at 3,034.25 (close)
Dollar/yen: DOWN at 152.94 yen from 152.96 yen on Wednesday
Euro/dollar: UP at $1.0756 from $1.0747
Pound/dollar: UP at $1.2575 from $1.2543
Euro/pound: DOWN at 85.52 pence from 85.67 pence
Brent North Sea Crude: DOWN 0.5 percent at $90.07 per barrel
West Texas Intermediate: DOWN 0.6 percent at $85.71 per barrel
burs-rl/tw
