London (AFP) – Stock markets rose Tuesday after a hotter-than-expected US inflation report that could muddy the outlook for the Federal Reserve’s decision-making on cutting interest rates.
The annual consumer price index (CPI) came in at 3.2 percent last month, the Labor Department said, while the “core” measure stripping out volatile food and energy prices rose 3.8 percent. Both were slightly higher than expected.
“This complicates the picture for US interest rates and makes next week’s Fed meeting even more important for the future direction of financial markets,” said Kathleen Brooks, an analyst at XTB.com. “Overall, we expect financial markets to trade with a cautious tone in the coming days leading up to next week’s Fed meeting,” she said.
US stock indexes opened higher before turning slightly into the red and going green again. European stock indexes mostly held on to their morning gains.
“With inflation remaining more stubborn than previously thought, we can expect the Fed to hold its ‘wait and see’ approach until we see inflation trending lower on a consistent basis,” said Mahmoud Alkudsi, senior market strategist at ADSS.
Still, some analysts said they don’t expect a lasting impact from Tuesday’s report. Brooks at XTB pointed out that Wall Street continued its rally after a similarly disappointing CPI report a month ago. “We don’t think that the February number will knock the rally in stocks in the short term,” she said.
Patrick O’Hare, an analyst at Briefing.com, said the inflation rate appeared to have been exaggerated by rental price data, which lags other items in the index.
London led the way in Europe Tuesday, rising more than one percent approaching midday, as official British unemployment and wages data boosted hopes of a cut to UK interest rates in the coming months. “Investors got some cheer from the latest jobs numbers which showed a slowdown in wages and a pick-up in the Unemployment Rate. Put together, these raise the likelihood of a rate cut at the Bank of England’s June meeting,” said David Morrison, senior market analyst at Trade Nation.
Hong Kong shares continued their recent advances, climbing more than three percent, helped by fresh buying of tech firms. Electronics giant Xiaomi surged more than 10 percent after saying it would start deliveries of its first electric vehicle by the end of this month.
However, Tokyo fell again as speculation swirls that the Bank of Japan will next week shift away from its ultra-loose monetary policy.
– Key figures around 1350 GMT –
New York – Dow: UP 0.2 percent at 38,851.22 points
New York – S&P 500: UP 0.4 percent at 5,138.51
New York – Nasdaq Composite: UP 0.5 percent at 16,092.77
London – FTSE 100: UP 1.1 percent at 7,751.96
Paris – CAC 40: UP 0.2 percent at 8,033.91
Frankfurt – DAX: UP 0.4 percent at 17,821.30
EURO STOXX 50: UP 0.3 percent at 4,944.18
Tokyo – Nikkei 225: DOWN 0.1 percent at 38,797.51 (close)
Hong Kong – Hang Seng Index: UP 3.1 percent at 17,093.50 (close)
Shanghai – Composite: DOWN 0.4 percent at 3,055.94 (close)
Dollar/yen: DOWN at 147.84 yen from 146.96 yen on Monday
Euro/dollar: DOWN at $1.0915 from $1.0929
Pound/dollar: DOWN at $1.2763 from $1.2812
Euro/pound: UP at 85.52 pence from 85.28 pence
Brent North Sea Crude: DOWN 0.4 percent at $81.89 per barrel
West Texas Intermediate: UP 0.5 percent at $77.52 per barrel
burs-gv/lth
© 2024 AFP
