London (AFP) – Equity markets climbed on Thursday as investors welcomed cool US inflation data and tech stocks bounced. US consumer inflation slowed unexpectedly in November, climbing 2.7 percent from a year ago, coming considerably in below analysts’ predictions of a 3.1-percent uptick.
“Although this is just one inflation reading — and admittedly not the Fed’s preferred inflation gauge — easing inflation concerns could open the door to a more accommodative Fed moving forward,” said eToro analyst Bret Kenwell. “That has markets rallying this morning.” Wall Street’s three main indices pushed higher, with the tech-heavy Nasdaq Composite up 1.8 percent in late morning trading.
Meanwhile, shares in Oracle rose 2.1 percent. Shares in the cloud computing giant plunged more than five percent Wednesday, dragging down other tech stocks and the Nasdaq index, on reports an investor pulling out put its data centre project at risk. That report came after Oracle and chip giant Broadcom last week unveiled disappointing earnings reports. Shares in Google-parent Alphabet gained 2.0 percent and Broadcom edged 0.3 percent higher.
“The sector got a boost from a strong set of quarterly results from Micron Technology after last night’s close” and its “bullish forward guidance,” said Trade Nation analyst David Morrison. Shares in the company, which produces computer memory and storage, jumped nearly 12 percent.
“The question now is if today’s bounce is a dip-buying opportunity which morphs into a ‘Santa Rally’, or if it is simply a round of short-covering ahead of another lurch lower,” said Morrison. Hopes for an end-of-year rally, often called a Santa Rally, have been dealt a blow after the US Federal Reserve last week hinted that it could pause its rate cuts next month. Questions about whether all the cash being pumped into AI is creating a bubble have also acted as a dampener on sentiment.
The Bank of England, as expected, cut its key interest rate to 3.75 percent after UK inflation eased faster than expected and as the economy weakened. However, the pound rose as policymakers indicated that although rates would continue to decline in 2026, the pace would be dependent upon data. That sent London’s FTSE 100 stock index lower for a period in afternoon trading, but it ended the day with a gain of 0.7 percent.
The ECB held rates steady, also as expected, while it raised growth forecasts for this year and next. It was the fourth meeting in a row where the ECB held rates steady following a year-long series of cuts. “The new macroeconomic projections suggest there is little scope for further easing in the short term,” said GianLuigi Mandruzzato, senior economist at EFG Asset Management. ECB chief Christine Lagarde indicated that “all optionalities should be on the table” regarding future interest rate decisions, citing high global “uncertainty.” Both Frankfurt and Paris stocks ended the day higher.
Asian stock markets mostly sank Thursday after Wednesday’s sell-off on Wall Street as worries over the tech sector’s colossal spending on artificial intelligence continued to dog investor sentiment.
– Key figures at around 1630 GMT –
New York – Dow: UP 0.9 percent at 48,311.74 points
New York – S&P 500: UP 1.3 percent at 6,809.13
New York – Nasdaq Composite: UP 1.8 percent at 23,110.61
London – FTSE 100: UP 0.7 percent at 9,837.77 (close)
Paris – CAC 40: UP 0.8 percent at 8,150.64 (close)
Frankfurt – DAX: UP 1.0 percent at 24,199.50 (close)
Tokyo – Nikkei 225: DOWN 1.0 percent at 49,001.50 (close)
Hong Kong – Hang Seng Index: DOWN 0.1 percent at 25,447.44 (close)
Shanghai – Composite: UP 0.2 percent at 3,876.37 (close)
Euro/dollar: DOWN at $1.1739 from $1.1743 on Wednesday
Pound/dollar: UP at $1.3393 from $1.3379
Dollar/yen: DOWN at 155.44 yen from 155.70
Euro/pound: DOWN at 87.65 pence from 87.77
Brent North Sea Crude: UP 0.6 percent at $60.03 per barrel
West Texas Intermediate: UP 0.7 percent at $56.21 per barrel
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© 2024 AFP
