European stocks rose on Wednesday, with the London market setting a new record on hopes of lower interest rates to ease inflation.
However, stock prices on Wall Street fell as gains in response to interest rate cuts lost momentum and oil prices fell due to demand concerns amid abundant US stocks.
London's FTSE 100 index hit an all-time high of 8,364.04 points on the eve of the Bank of England's monetary policy decision. The Bank of England is expected to keep interest rates on hold, but a summer cut is possible.
Frankfurt and Paris stocks also rose, spurred by speculation that the European Central Bank may also decide to cut interest rates soon, defying losses in Asia.
Sweden's central bank on Wednesday cut its key interest rate for the first time in eight years, citing easing inflation, and signaled two more cuts before the end of the year.
The move comes after the Swiss National Bank announced interest rate hikes across Europe and the United States aimed at curbing consumer price increases in the wake of the coronavirus pandemic and Russia's invasion of Ukraine. This comes almost two months after the Bank cut interest rates for the first time.
However, the US Federal Reserve is not expected to cut interest rates before September due to rising inflation in the world's largest economy.
– Optimism –
“European stocks are rising on optimism that borrowing costs will soon come down,” Citi Index analyst Fiona Cincotta told AFP, with Frankfurt's DAX also nearing record highs. He pointed out that there was.
“The Bank of England is expected to keep interest rates on hold, but it could start paving the way for rate cuts in the coming months.”
The prospect of lower interest rates tends to boost stock markets because it reduces borrowing costs for individuals and businesses, thereby boosting both consumer spending and investment.
“The low interest rate environment is good news for households and businesses alike,” Cincotta concluded.
In Asia, major markets fell as dealers held their breath, with Hong Kong falling for the second straight day after a 10-day winning streak.
Crude oil prices have fallen due to demand concerns and ample inventories.
David Morrison, senior market analyst at Trade Nation, said the drop in oil prices reflected the postponement of U.S. interest rate cuts until the fall.
“This means the U.S. economy won't feel the stimulatory effects of deep interest rate cuts this year, which should weigh on oil demand,” he said.
He also noted that Tuesday's data shows that U.S. crude inventories are plentiful, with more data expected to be released later Wednesday.
~Major figures around 1330 GMT~
New York – Dow: down 0.2% to 38,827.72 points
New York – S&P 500: down 0.4% to 5,168.50
New York – Dow: Nasdaq Composite: down 0.6% to 16,228.05
London – FTSE 100: up 0.3% to 8,339.45
Paris – CAC 40: 8,132.30, up 0.7%
Frankfurt – DAX: up 0.2% to 18,457.87
Euro STOXX 50: up 0.3% to 5,039.65
Tokyo – Nikkei 225: down 1.6% to 38,202.37 (closing price)
Hong Kong Hang Seng Index: 0.9% lower at 18,313.86 (closing price)
Shanghai – Overall: down 0.6% to 3,128.48 (close price)
EUR/USD: down to $1.0749 from $1.0772 on Tuesday
GBP/USD: down from $1.2564 to $1.2476
USD/JPY: Increased from 153.86 yen to 155.56 yen
EUR/GBP: up from 85.72 pence to 86.15
West Texas Intermediate: down 0.8% to $77.79 per barrel
Brent crude oil: down 0.8% to $82.53 per barrel
crowbar-rl/lth
