Eurozone stocks rose on Wednesday as a sharper-than-expected slowdown in inflation fueled hopes of a European Central Bank interest rate cut, but London followed Asia and Wall Street with losses.
Asian stocks mainly fell on skepticism that the US Federal Reserve would cut interest rates as expected this year, but the earthquake in Taiwan shook sentiment.
Gold soared to an all-time high of $2,288.40 an ounce in Asian trading, extending a bellwether record for the precious metal on haven demand and expectations of a rate cut.
Oil prices hit a five-month high due to unrest in the oil-rich Middle East region and OPEC's plans to hold a technical meeting later Wednesday.
– Euro inflation slows –
Investors on Wednesday took note of news that the euro zone's annual inflation rate slowed last month to 2.4% from 2.6% in February as food and drink price increases continued to slow.
Fiona Cincotta, an analyst at City Index, told AFP: “Slower inflation in the euro zone and deepening of yesterday's manufacturing downturn have led to the ECB starting to cut interest rates in June and stocks to rise. There are growing expectations that this will happen.”
The Frankfurt-based lender has kept interest rates on hold since October 2023 after an aggressive rate hike campaign to curb soaring inflation.
“Although the ECB appears to be on track to begin a rate cutting cycle this quarter, there is some doubt as to whether the Fed will be able to act in the coming months,” Cincotta said.
Traders have been pushing global stocks higher in recent months, buoyed by optimism that the Federal Reserve will begin monetary easing later this year as U.S. inflation recovers toward the regulator's 2% target. .
But those expectations have now begun to fade, with forecasts on a range of indicators including inflation, factory activity and employment taking a toll on U.S. expectations.
~Asia's struggles~
Markets across Asia struggled after a retreat on Wall Street, which was also helped by profit-taking after the Dow and S&P 500 set multiple records.
Tokyo's index fell by about 1%, while Hong Kong, Sydney, Seoul and Manila fell further.
Shanghai, Singapore, Wellington and Jakarta also posted large deficits, while Bangkok and Mumbai rose.
Taipei stock prices fell after the deadly 7.4 magnitude earthquake struck just off Taiwan's east coast, adding to uncertainty in the region but also with relief that the tsunami threat was over. .
Scope Markets analyst Joshua Mahoney said: “Taiwan today was rocked by its worst earthquake in 25 years, sending shockwaves through the market as investors try to assess the potential impact on the economy and supply chain. “I gave them,” he said.
– Main figures around 1050 GMT –
London – FTSE 100: down 0.3%, 7,908.17 points
Paris – CAC 40: 8,158.24, up 0.4
Frankfurt – DAX: 18,346.91 up 0.4%
Euro STOXX 50: up 0.5% to 5,068.30
Tokyo – Nikkei Stock Average: down 1.0% to 39,451.85 (closing price)
Hong Kong Hang Seng Index: 1.2% lower at 16,725.10 (closing price)
Shanghai – Overall: down 0.2% to 3,069.30 (close price)
New York – Dow: down 1.0% to 39,170.24 (closing price)
Dollar/JPY: rose to 151.76 yen from Tuesday's 151.56 yen
EUR/USD: down from $1.0770 to $1.0766
GBP/USD: up from $1.2578 to $1.2580
EUR/GBP: down from 85.62p to 85.57p
Brent crude: up 0.5% to $89.33 per barrel
West Texas Intermediate: up 0.4% to $85.49 per barrel
Dan RFJ/Rocks
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