European stocks closed mostly higher Tuesday, while US indices gained and the dollar strengthened on better-than-expected retail data and hawkish comments from the US Federal Reserve.
Gas prices had surged earlier after Germany delayed approving a key pipeline from Russia, while the focus on monetary policy was confirmed by the euro’s weakness based on comments from European Central Bank chief Christine Lagarde.
On the cryptocurrency market, bitcoin dipped below the $60,000 mark to a two-week low before recovering slightly.
A higher-than-expected increase in US retail sales in October data released on Tuesday may have reinforced the positive mood in stock markets, while major retailers Walmart and Home Depot both also beat third-quarter expectations.
Financial players were “caught between two strong counter-forces, a strong earnings season providing the bullish case and a long list of downside risks — most notably inflation and interest rates — which continue to weigh on sentiment,” OANDA analyst Craig Erlam said.
Investors have been watching central banks keenly for signs they could withdraw stimulus in response to economic recovery and rising inflation, lending weight to comments from Federal Reserve policymaker James Bullard.
He told Bloomberg Television the Fed’s gradual withdrawal of support, known as tapering, “could move faster”.
“We could speed up the taper if it is appropriate,” Bullard said.
The dollar was at 16-month highs against the euro in the afternoon following the remarks.
In Britain, Bank of England Governor Andrew Bailey on Monday told British lawmakers that he felt “very uneasy” about high inflation ahead of the latest data release Wednesday, prompting some analysts to forecast a December rate hike.
But in the eurozone, Lagarde had on Monday dismissed talk of potential higher rates in 2023 as premature.
Meanwhile Turkey’s lira currency slumped to new historic lows ahead of a central bank meeting Thursday, where policymakers are expected to lower rates despite surging inflation at almost 20 percent.
– Pipeline delayed –
In Germany, a regulator said it was temporarily halting the approval process for Russia’s controversial Nord Stream 2 pipeline, seen by Berlin as guaranteeing energy supply but by the country’s allies as a potential tool for Russian blackmail.
The certification procedure “will remain suspended until the main assets and human resources” have been transferred from the Nord Stream 2 parent company to its German subsidiary, the energy regulator said.
The move sent natural gas prices surging as much as 12 percent, falling back to add around 5.5 percent in the afternoon.
Late Monday, virtual talks between US President Joe Biden and China’s Xi Jinping ended with the world’s two biggest economies trading strong warnings on the future of Taiwan, the self-governing democracy claimed by Beijing.
Relations between the US and China had plummeted during the presidency of Donald Trump, who launched a trade war with Beijing.
Biden on Monday raised “concerns” with China over the wider issues of human rights abuses and mass repression against the Uyghurs in the northwest region of Xinjiang.
For markets, “it doesn’t hurt… to know that the line of communication between these two leaders remains open,” said Briefing.com analyst Patrick O’Hare.
– Key figures around 1645 GMT –
New York – Dow: UP 0.5 percent at 36,263.80 points
London – FTSE 100: DOWN 0.3 percent at 7,326.97 (close)
Frankfurt – DAX: UP 0.6 percent at 16,247.86 (close)
Paris – CAC 40: UP 0.3 percent at 7,152.60 (close)
EURO STOXX 50: UP 0.4 percent at 4,402.15
Tokyo – Nikkei 225: UP 0.1 percent at 29,808.12 (close)
Hong Kong – Hang Seng Index: UP 1.3 percent at 25,713.78 (close)
Shanghai – Composite: DOWN 0.3 percent at 3,521.79 (close)
Euro/dollar: DOWN at $1.1336 from $1.1373 at 2140 GMT
Pound/dollar: UP at $1.3423 from $1.3414
Euro/pound: DOWN at 84.45 pence from 84.76 pence
Dollar/yen: UP at 114.61 yen from 114.12 yen
Brent North Sea crude: UP 0.4 percent at $82.34 per barrel
West Texas Intermediate: FLAT at $80.89 per barrel
burs-tgb/lth
