LONDON: Eurozone equities rose Wednesday as a sharper-than-expected inflation slowdown stoked European Central Bank rate cut hopes, although London followed Asia and Wall Street lower.
Asian stocks mostly sank on scepticism that the US Federal Reserve will cut its interest rates as much as hoped this year, while a massive earthquake in Taiwan rocked sentiment.
Gold zoomed to an all-time pinnacle at $2,288.40 per ounce in Asian trade on haven demand and rate cut speculation, extending the precious metal’s trail-blazing record run.
European shares open higher on energy boost, eye quarterly gains
Oil prices scored fresh five-month peaks on unrest in the crude-rich Middle East, and with OPEC set to hold a technical meeting later on Wednesday.
Euro inflation slows
Investors seized Wednesday on news that the eurozone’s annual rate of inflation decelerated to 2.4 percent last month from 2.6 percent in February thanks to a continued slowdown in food and drink price increases.
“Cooling eurozone inflation, coupled with yesterday’s deepening downturn in the manufacturing sector, are cementing expectations that the ECB will start cutting interest rates in June, lifting stocks,” City Index analyst Fiona Cincotta told AFP.
The Frankfurt-based institution has held rates steady since October 2023 after an aggressive rate-hiking campaign to tame soaring inflation.
“While the ECB appears on track to kick off its rate-cutting cycle in the current quarter, there are some doubts over whether the Fed will be able to move in the coming months,” noted Cincotta.
Traders have pushed global equities higher for months, driven by optimism that the Fed will begin easing its monetary policy this year as US inflation comes back towards officials’ two percent target.
But forecast-busting US data on a range of indicators including inflation, factory activity and jobs has dealt a hefty blow to those hopes, and now expectations are beginning to wane.
Asian struggles
After a retreat on Wall Street, which has also been fuelled by profit-taking after a run-up that has seen the Dow and S&P 500 hit multiple records, markets across Asia struggled.
Tokyo sank around one percent, while Hong Kong, Sydney, Seoul and Manila were off more.
Shanghai, Singapore, Wellington and Jakarta were also well in the red, but Bangkok and Mumbai rose.
Taipei stocks fell after a deadly 7.4-magnitude earthquake just off Taiwan’s east coast, which added to the regional uncertainty, though there was some relief that the threat of a tsunami had dissipated.
“Taiwan was rocked by its worst earthquake in 25 years today, sending shockwaves through markets as investors looked to gauge the potential implications to the economy and supply chains,” said Scope Markets analyst Joshua Mahony.
Key figures around 1050 GMT
London - FTSE 100: DOWN 0.3 percent at 7,908.17 points
Paris - CAC 40: UP 0.4 at 8,158.24
Frankfurt - DAX: UP 0.4 percent at 18,346.91
EURO STOXX 50: UP 0.5 percent at 5,068.30
Tokyo - Nikkei 225: DOWN 1.0 percent at 39,451.85 (close)
Hong Kong - Hang Seng Index: DOWN 1.2 percent at 16,725.10 (close)
Shanghai - Composite: DOWN 0.2 percent at 3,069.30 (close)
New York - Dow: DOWN 1.0 percent at 39,170.24 (close)
Dollar/yen: UP at 151.76 yen from 151.56 yen on Tuesday
Euro/dollar: DOWN at $1.0766 from $1.0770
Pound/dollar: UP at $1.2580 from $1.2578
Euro/pound: DOWN at 85.57 pence from 85.62 pence
Brent North Sea Crude: UP 0.5 percent at $89.33 per barrel
West Texas Intermediate: UP 0.4 percent at $85.49 per barrel
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