US and European stock markets mostly rose Thursday heading into the Easter break, with traders still focused on inflation and the outlook for interest rates.
The broad-based S&P 500 — which hit another record a day earlier — and the tech-heavy Nasdaq were slightly up in morning deals while the Dow was flat.
The London, Paris and Frankfurt stock markets climbed in afternoon deals ahead of closing on Friday and Monday for Easter. Wall Street will be closed on Good Friday but reopens Monday.
Asian indices closed mixed after a Federal Reserve official floated the idea of delaying or reducing cuts to US interest rates, boosting the dollar.
The yen steadied having hit a 34-year low against the dollar on Wednesday. Oil prices rose more than one percent on persistent concerns over the possibility of tight supplies.
Major stock markets “are still hovering around record levels, and market optimism remains high”, said Pierre Veyret, analyst at ActivTrades.
“Investors continue to bet on upcoming rate cuts from central banks around the world.”
The US Federal Reserve, the European Central Bank and the Bank of England have paused their rate hike campaigns as inflation has slowed but remains elevated, fuelling speculation on when they will start cutting borrowing costs.
A recent market rally has started to peter out as traders assess the outlook for US monetary policy, with a string of above-forecast inflation and economic data leading some to question whether the Fed can stick to its projection of three cuts this year.
Confidence has not been helped by comments from Fed officials in the past week.
“Nothing is settled when it comes to the timing of rate cuts in the US and elsewhere, and, in our view this is the key theme that will drive markets in Q2 (the second quarter),” said Kathleen Brooks, research director at XTB.
The Commerce Department made a surprise upward revision Thursday to fourth-quarter GDP growth, to an annual rate of 3.4 percent, but analysts noted this was backward-looking information.
But it would reinforce the belief that the economy performed better than anticipated despite the Fed holding interest rates at elevated levels, said Patrick O’Hare of Briefing.com.
Initial jobless claims decreased for the week ending March 23, with the relatively low level suggesting employment conditions were still favourable for economic growth, he added.
Attention moves to the release Friday of the personal consumption expenditures (PCE) index — the Fed’s preferred gauge of inflation — which is expected to show a slight uptick.
“Many are concerned that it could tick higher, just as CPI (consumer prices) and PPI (wholesale prices) did earlier this month,” said David Morrison, senior market analyst at Trade Nation.
– Key figures around 1350 GMT –
New York – Dow: FLAT at 39,768.14 points
New York – S&P 500: UP 0.1 percent at 5,253.57
New York – Nasdaq Composite: UP 0.1 percent at 16,417.83
London – FTSE 100: UP 0.4 percent at 7,961.79
Paris – CAC 40: UP 0.1 percent at 8,216.61
Frankfurt – DAX: UP 0.1 percent at 18,490.35
EURO STOXX 50: UP 0.2 percent at 5,089.20
Tokyo – Nikkei 225: DOWN 1.5 percent at 40,168.07 (close)
Hong Kong – Hang Seng Index: UP 0.9 percent at 16,541.42 (close)
Shanghai – Composite: UP 0.6 percent at 3,010.66 (close)
Dollar/yen: DOWN at 151.22 yen from 151.34 yen on Wednesday
Euro/dollar: DOWN at $1.0812 from $1.0831
Pound/dollar: UP at $1.2649 from $1.2641
Euro/pound: DOWN at 85.50 pence from 85.66 pence
Brent North Sea Crude: UP 1.3 percent at $87.22 per barrel
West Texas Intermediate: UP 1.2 percent at $82.29 per barrel
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