London (AFP) – European stock markets rose while Asia was mixed on Thursday after the US Federal Reserve lowered interest rates but left investors wondering how many more cuts were in the pipeline. Paris and Frankfurt stocks rose more than one percent, with German sentiment buoyed by a central bank statement saying Germany should dodge a technical recession in the immediate future.
London rose less enthusiastically as the Bank of England kept its own rate at four percent in the face of stubbornly high inflation, which stands at 3.8 percent in the UK. “Although we expect inflation to return to our two-percent target, we’re not out of the woods yet, so any future cuts will need to be made gradually and carefully,” BoE governor Andrew Bailey said in a statement.
While Britain’s interest rate was kept unchanged, Norway’s central bank cut borrowing costs on Thursday, after a similar move by Canada on Wednesday. On the heels of recent economic reports showing weaker US jobs growth, the Fed on Wednesday said it would lower borrowing costs by 25 basis points, its first reduction since December.
The decision to cut came even as US inflation runs well above policymakers’ two-percent target, but analysts said the main focus was on the jobs market. Fed policymakers are split between those who expect at least two interest rate cuts later this year and those who anticipate one or fewer. Fed boss Jerome Powell remained cagey, telling reporters decision-makers were approaching it “meeting by meeting”.
After Powell’s comments, “markets were left feeling less confident on the extent of the likely easing cycle,” said Jim Reid, managing director at Deutsche Bank. US markets ended on a tepid note, with the Dow up but the broad-based S&P 500 and tech-heavy Nasdaq down.
Asian investors were also cautious. Shanghai stocks retreated overall, and Hong Kong’s session also ended in the red. Tokyo closed in the green as the Fed decision boosted the dollar against the yen and other currencies, helping Japanese exporters. Seoul closed at a record high, fuelled by a tech stock surge led by Samsung Electronics and chipmaker SK Hynix, which soared nearly six percent, following reports that China banned its tech firms from purchasing Nvidia chips.
Chinese chip firms also surged after the Financial Times reported that China’s internet regulator had instructed firms including Alibaba and ByteDance to terminate orders for Nvidia’s RTX Pro 6000D chips. The state-of-the-art processors are made especially for China.
– Key figures at around 1115 GMT –
London – FTSE 100: UP 0.2 percent at 9,225.85 points
Paris – CAC 40: UP 1.2 percent at 7,878.11
Frankfurt – DAX: UP 1.2 percent at 23,649.85
Tokyo – Nikkei 225: UP 1.2 percent at 45,303.43 (close)
Shanghai – Composite: DOWN 1.2 percent at 3,831.66 (close)
Hong Kong – Hang Seng Index: DOWN 1.4 percent at 26,544.85 (close)
New York – Dow: UP 0.6 percent at 46,018.32 (close)
Euro/dollar: UP at $1.1830 from $1.1811 on Wednesday
Pound/dollar: UP at $1.3628 from $1.3626
Dollar/yen: UP at 147.35 yen from 147.00 yen
Euro/pound: UP at 86.81 pence from 86.70 pence
West Texas Intermediate: FLAT at $64.07 per barrel
Brent North Sea Crude: FLAT at $67.97 per barrel
© 2024 AFP
