London (AFP) – Major stock markets were little changed Thursday after the latest US inflation report failed to settle the question of when interest rates could start coming down.
The personal consumption expenditures (PCE) price index — the US central bank’s favoured measure of inflation — rose at an annual rate of 2.4 percent in January, down from 2.6 percent in December, the Department of Commerce said.
Markets initially rose as the slowing headline inflation number appeared to suggest the Federal Reserve could start cutting interest rates from their 23-year high.
However, markets gave up those gains as the closely watched “core inflation” measure, which strips out volatile food and energy costs, increased by 0.4 percent from a month earlier, indicating an uptick in underlying inflation from December to January.
“The collective sigh of relief from financial markets that the PCE data did not come in stronger than expected, is masking the evidence that shows the disinflation trend is slowing down, which could keep the Fed on pause for some time,” said Kathleen Brooks, research director XTB.
The monthly jump indicates “inflation pressure coming down the pipeline” and “does not seem compatible with rate cuts from the Federal Reserve.”
All the main US indexes rose initially before giving back some of those gains, with the Dow dipping into the red.
Expectations for rate cuts had already shifted to later this year after earlier data showed inflation in the world’s biggest economy stubbornly above the Fed’s target, while the stock market has been supported by healthy profits at major corporations.
“At one point, the bond market was pricing in the first rate cut in March,” said Bret Kenwell, analyst at eToro.”Currently, that consensus has shifted to June and this report likely doesn’t do much to change that outlook.”
In Europe, data showed inflation eased further in Germany, France and Spain. Eurozone inflation figures are due Friday.
Stocks ended higher in Frankfurt and little changed in London, while the Paris CAC 40 index reached a fresh intra-day high before falling.
The dollar rose slightly against its main rivals, while bitcoin rallied further to just over $62,000. Oil prices were largely flat.
– Key figures around 1640 GMT –
New York – Dow: DOWN 0.1 percent at 38,926.08 points
New York – S&P 500: UP 0.2 percent at 5,078.04
New York – Nasdaq Composite: UP 0.3 percent at 15,995.17
London – FTSE 100: UP 0.1 percent at 7,630.02 (close)
Paris – CAC 40: DOWN 0.3 percent at 7,927.43 (close)
Frankfurt – DAX: UP 0.4 percent at 17,678.19 (close)
EURO STOXX 50: DOWN 0.1 percent at 4,877.77 (Close)
Tokyo – Nikkei 225: DOWN 0.1 percent at 39,166.19 (close)
Hong Kong – Hang Seng Index: DOWN 0.2 percent at 16,511.44 (close)
Shanghai – Composite: UP 1.9 percent at 3,015.17 (close)
Euro/dollar: DOWN at $1.0811 from $1.0840 on Wednesday
Dollar/yen: DOWN at 149.78 yen from 150.70 yen
Pound/dollar: DOWN at $1.2635 from $1.2661
Euro/pound: DOWN at 85.56 pence from 85.60 pence
Brent North Sea Crude: UP 0.1 percent at $83.73 per barrel
West Texas Intermediate: UP 0.3 percent at $78.78 per barrel
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© 2024 AFP
