US and European stock markets mostly rose on Wednesday after inflation data cemented expectations that the Federal Reserve will trim interest rates next month.
Wall Street’s three main indexes pushed higher at the opening bell after November consumer inflation figures were in line with analyst expectations.
The consumer price index (CPI) rose to 2.7 percent last month from a year ago, up slightly from 2.6 percent in October.
“With the CPI numbers broadly in line, it is likely that the Fed will not be derailed and will cut rates again next week,” Jochen Stanzl, chief market analyst at CMC Markets.
“The data is not a showstopper for the current bull run on Wall Street,” he added.
Ahead of the data investors priced in a 86 percent chance the Fed will next week cut interest rates by a quarter of a percentage point. That rose to 98 percent after the CPI data was published.
But with inflation already ticking higher, and the possibility that US president-elect Donald Trump’s planned policies could reignite price increases, analysts see the Fed likely taking a breather.
“The Fed will likely await further jobs market and inflationary data before considering the third instalment of this rate cutting cycle, allowing the latest rate cut to have its full effect,” said Srijan Katyal, chief strategist at ADSS brokerage.
Meanwhile the S&P 500 advanced solidly and the tech-heavy Nasdaq Composite gained more than one percent, flirting with the 20,000 level.
However the Dow gave up its early gains and was flat as European markets closed.
Paris and Frankfurt stocks rose ahead of the European Central Bank’s own interest rate announcement on Thursday, with analysts expecting another cut as it seeks to boost eurozone growth.
Investors are also eyeing political developments in France, where officials said President Emmanuel Macron aims to name a new prime minister “within 48 hours” as he seeks to end political deadlock following the ouster of Michel Barnier.
In company news, shares in German retail giant Zalando shed more than four percent on Frankfurt’s DAX index, after it acquired domestic rival About You in a deal worth around 1.1 billion euros ($1.2 billion).
Shares in Zara owner Inditex slid more than six percent after a record quarterly profit for the group fell short of market estimates.
Shares in Shanghai rose but Hong Kong gave up an early rally to end in the red.
Traders were keeping tabs on China to see if it will announce further measures to support its struggling economy as leaders gather Wednesday for a conference to hammer out next year’s agenda.
President Xi Jinping and other top leaders on Monday announced their first major shift in policy for more than a decade, saying they would “implement a more active fiscal policy and an appropriately relaxed” strategy.
Those remarks sparked hopes for more interest rate cuts and the freeing up of more cash for lending.
The announcement comes as officials prepare for a second term for Trump, who has indicated he will reignite his hardball trade policies, fuelling fears of another standoff between the superpowers.
– Key figures around 1630 GMT –
New York – Dow: FLAT at 44,243.17 points
New York – S&P 500: UP 0.8 percent at 6,083.03
New York – Nasdaq Composite: UP 1.5 percent at 19,986.96
London – FTSE 100: UP 0.3 percent at 8,301.62 (close)
Paris – CAC 40: UP 0.4 percent at 7,423.40 (close)
Frankfurt – DAX: UP 0.3 percent at 20,399.16 (close)
Tokyo – Nikkei 225: FLAT at 39,372.23 (close)
Hong Kong – Hang Seng Index: DOWN 0.8 percent at 20,155.05 (close)
Shanghai – Composite: UP 0.3 percent at 3,432.49 (close)
Euro/dollar: DOWN at $1.0492 from $1.0529 on Tuesday
Pound/dollar: DOWN at $1.2749 from $1.2773
Dollar/yen: UP at 152.48 yen from 151.92 yen
Euro/pound: DOWN at 82.30 from 82.42 pence
Brent North Sea Crude: DOWN 0.1 percent at $71.05 per barrel
West Texas Intermediate: UP 1.6 percent at $69.66 per barrel
burs-rl/sbk
