Europe’s main stock markets and the euro climbed Thursday as the European Central Bank cut interest rates for the second time this year.
Wall Street shares, however, were mixed as investors reacted to data showing an acceleration in wholesale inflation in August.
While the US Federal Reserve is expected to finally cut its own borrowing costs next week, the ECB reduced its key rate by a quarter percentage point again, as expected.
It was the same size as its previous cut in June, which marked the end of a record hiking cycle that began in mid-2022 to tame a surge in consumer prices.
Frankfurt and Paris stocks gave up some of their gains following the ECB announcement which gave no indication on future rate cuts and was accompanied by a slight reduction in its growth forecasts.
The euro rose against the dollar following the decision.
“The ECB’s message may have been less dovish than expected today, but it did not seem to get through to financial markets on Thursday,” said XTB brokerage’s research director, Kathleen Brooks.
ECB policymakers “remain focused on inflation, rather than following the Fed by placing less emphasis on inflation and focusing instead on growth.”
She added that despite the relatively hawkish tone markets still believe the ECB will cut rates in October and December given the bloc’s tepid growth.
A US consumer inflation reading Wednesday allowed investors to breathe a sigh of relief after a tough couple of weeks that have been filled with worries about the world’s top economy, as a weak run of jobs figures stoked recession fears.
Wall Street’s three main indexes wobbled on Thursday after figures showed wholesale inflation rose 0.2 percent on a month-on-month basis in August after reaching zero percent in July.
The Fed is yet to join other central banks around the world who have now started to cut borrowing costs after they hiked aggressively when inflation soared as nations emerged from Covid lockdowns.
The rise in wholesale inflation will fuel a debate about the size of next week’s cut.
Gold hit a new record of $2,555.19 after the wholesale inflation data was released.
Bets have surged on a 25-basis-point reduction rather than a bigger 50-basis-point cut after Wednesday’s data showed core inflation had seen an unexpected uptick.
US stocks had rallied on Wednesday, with a big jump in the tech sector led by chip titan Nvidia rocketing more than eight percent .
And the positive mood flowed through to Asia on Thursday, where Tokyo led gainers and jumped more than three percent after seven days of losses.
Oil prices rose more than three percent.
– Key figures around 1530 GMT –
New York – Dow: DOWN 0.2 percent at 40,797.31 points
New York – S&P 500: UP less than 0.1 at 5,557.42
New York – Nasdaq Composite: UP 0.3 percent at 17,439.86
London – FTSE 100: UP 0.6 percent at 8,240.97 (close)
Paris – CAC 40: UP 0.5 percent at 7,435.07 (close)
Frankfurt – DAX: UP 1.0 percent at 18,518.39 (close)
Tokyo – Nikkei 225: UP 3.4 percent at 36,833.27 (close)
Hong Kong – Hang Seng Index: UP 0.8 percent at 17,240.39 (close)
Shanghai – Composite: DOWN 0.2 percent at 2,717.12 (close)
Euro/dollar: UP at $1.1036 from $1.1018 on Wednesday
Pound/dollar: UP at $1.3076 from $1.3046
Euro/pound: DOWN at 84.42 pence from 84.43 pence
Dollar/yen: DOWN at 142.34 yen from 142.38 yen
Brent North Sea Crude: UP 3.1 percent at $72.79 per barrel
West Texas Intermediate: UP 3.6 percent at $69.76 per barrel
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