Thu. Jun 13th, 2024

European markets were in a mixed mood on Friday as investors digested central bank decisions this week on interest rates, including from the US Federal Reserve, Bank of England and European Central Bank.

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On Friday morning, the FTSE 100 was down 0.2% at 7,643.80 points, France’s CAC 40 was up 0.41% at 7,606.55 points, while Germany’s DAX index was up 0.67% at 16,866.07.

The mixed mood follows updates from key central banks this week. On Wednesday, the US Federal Reserve decided to keep interest rates unchanged, maintaining the range between 5.25% and 5.5% in its last meeting of the year. 

On Thursday, the pound sterling gained value after the Bank of England said it was keeping its base interest rate at a 15-year high of 5.25% in the UK.

Six members of the bank’s Monetary Policy Committee (MPC) voted to keep interest rates stable, against three members who voted to increase borrowing costs by 0.25 percentage points, to 5.5%.

Also on Thursday, in a highly anticipated move, the Governing Council of the European Central Bank (ECB) announced its decision to maintain the current key interest rates, with no changes to the main refinancing operations at 4.50%, the marginal lending facility at 4.75%, and the deposit facility at 4.00%.

The decision marked the second consecutive meeting where the ECB has opted for unchanged interest rates, possibly signaling the conclusion of the hiking cycle initiated in July 2022.

US and Asia markets

Meanwhile, Asian shares powered higher on Friday after the Dow Jones Industrial Average climbed to another record on excitement that the Federal Reserve might cut interest rates several times next year. US futures and oil prices also advanced.

Hong Kong led Asia’s gains with property developers jumping after some Chinese cities eased buying restrictions. The Hang Seng surged 2.2% to 16,764.62, but the Shanghai Composite index fell back, losing 0.5% to 2,942.56.

Troubled developer Country Garden’s shares jumped 5.1%, while China Evergrande gained 2.2% and Sino Ocean Holding surged 6.8%.

China’s National Bureau of Statistics reported that factory output rose 6.6% in November and retail sales were up more than 10%, glimmers of improvement for the economy after the post-COVID recovery faded much more quickly than expected.

However, investments in property weakened further, indicating that the crisis over excessive debt in that industry is far from resolved.

“Our cautious conclusion from all of this is that China’s recovery is ongoing. But it still looks narrowly based and vulnerable to any further worsening in the real estate sector,” ING Economics said in a research note.

Tokyo’s Nikkei 225 index gained 0.9% to 32,970.55 and the Kospi in Seoul added 0.8% to 2,563.56. In Australia, the S&P/ASX 200 advanced 0.9% to 7,442.70. Bangkok’s SET climbed 1% and the Sensex in India was up 0.7%.

On Thursday, the S&P 500 gained 0.3% to pull within 1.6% of its all-time high set early last year. It closed at 4,719.55. The Dow gained 0.4% to 37,248.35, and the Nasdaq climbed 0.2% to 14,761.56.

Moderna jumped 9.2% after reporting encouraging data from a study of its treatment for high-risk melanoma that’s used with Merck’s Keytruda. That helped offset a 6.3% slump for Adobe, which gave a forecast for 2024 revenue that fell short of analysts’ expectations.

Stocks have been broadly shooting higher since October on hopes that inflation has cooled enough for the Federal Reserve to not only stop its market-rattling hikes to interest rates but to even begin considering cutting them. Those hopes strengthened Wednesday after the Fed held its main rate steady and said the federal funds rate is likely at or near its peak.

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