NEW YORK, May 9 — European stocks advanced Wednesday, with London striking another record, driven by hopes of interest rate cuts while Wall Street finished mixed on another day without major macroeconomic news.
London’s FTSE 100 index forged an all-time peak at 8,364.04 points on the eve of a monetary policy decision from the Bank of England, which is forecast to hold rates but could flag a summer reduction.
Frankfurt and Paris stocks also pushed higher, shrugging off Asian losses, boosted by speculation that the European Central Bank could also decide to cut rates soon.
Sweden’s central bank cut its key interest rate for the first time in eight years on Wednesday, citing easing inflation and hinting at two more reductions before year-end.
The move comes almost two months after the Swiss National Bank became the first major Western central bank to lower its rates following a cycle of hikes across Europe and the United States, aimed at taming rising consumer prices spurred by the Russian invasion of Ukraine and the economic rebound after the Covid-19 pandemic.
The US Federal Reserve, however, is not expected to cut rates before September as inflation remains stubbornly high in the world’s biggest economy.
On Wednesday, the Dow advanced while the Nasdaq edged lower.
A handful of prominent earnings reports have commanded focus in New York in a week with few major economic reports following last week’s heavy calendar that included April jobs data and a Federal Reserve decision.
Optimism -
“European stocks are rising on optimism that borrowing costs will soon be lowered,” City Index analyst Fiona Cincotta told AFP, noting that Frankfurt’s DAX was also near its record.
“The BoE is expected to leave rates unchanged but could start to pave the way for a rate cut in the coming months.”
The prospect of lower interest rates tends to boost stock markets because it cuts borrowing costs for individuals and businesses, thereby lifting both consumer spending and investment.
The pound fell against the dollar and euro on the prospect of lower rates, also lifting London equities by making UK shares cheaper for foreign investors.
In Asia, major markets fell as dealers paused for breath, with Hong Kong falling for a second straight day after a 10-day winning streak.
Oil prices rebounded as Israel bombarded Rafah and conducted raids in the southern Gazan city while negotiations to halt the seven-month war resumed in Cairo.
Key figures around 2030 GMT
New York - Dow: UP 0.4 per cent at 39,056.39 (close)
New York - S&P 500: FLAT at 5,187.67 (close)
New York - Nasdaq Composite: DOWN 0.2 per cent at 16,302.76 (close)
London - FTSE 100: UP 0.5 per cent at 8,354.05 (close)
Paris - CAC 40: UP 0.7 per cent at 8,131.41 (close)
Frankfurt - DAX: UP 0.4 per cent at 18,498.38 (close)
EURO STOXX 50: UP 0.4 per cent at 5,038.17 (close)
Tokyo - Nikkei 225: DOWN 1.6 per cent at 38,202.37 (close)
Hong Kong - Hang Seng Index: DOWN 0.9 per cent at 18,313.86 (close)
Shanghai - Composite: DOWN 0.6 per cent at 3,128.48 (close)
Euro/dollar: DOWN at US$1.0748 from US$1.0755 on Tuesday
Pound/dollar: DOWN at US$1.2495 from US$1.2509
Dollar/yen: UP at 155.63 yen from 154.69 yen
Euro/pound: UP at 86.00 from 85.97 pence
West Texas Intermediate: UP 0.7 per cent at US$78.99 per barrel
Brent North Sea Crude: UP 0.5 per cent at US$83.58 per barrel
— AFP
