Global markets rebound amidst central bank rate speculation, geo-political tensions

Europe’s major stock markets showed resilience on Thursday, rebounding in a volatile session that followed a largely positive Asian market. Investors globally were evaluating the potential impact on interest rates after a sharp decline in markets the previous day.

The dip in global stocks on Wednesday was attributed to stronger-than-expected US retail sales, raising doubts about an early initiation of rate cuts by the US Federal Reserve. Additionally, concerns emerged from weak Chinese growth data, creating a cautious atmosphere.

London faced an unexpected acceleration in inflation, which contributed to skepticism about rate reductions by the Bank of England.

Similarly, European Central Bank President Christine Lagarde dispelled hopes of an early cut, stating that no such move was anticipated until the summer.

City Index analyst Fiona Cincotta commented on the market’s volatility, saying, “European markets are rising after yesterday’s losses as the choppy action that we have seen since the start of the year continues.” She added,

“With the European Central Bank rate decision and US inflation data in store for next week, the choppiness that is characterizing 2024 looks set to continue.”

The FTSE 100 in London turned positive, buoyed by positive news in the betting sector. Gambling giant Flutter reported surging annual sales and an upcoming US listing, causing its share price to soar 13% to £149.20.

In Asia, stocks generally trended higher, but gains were limited by Beijing’s lack of substantial measures to boost China’s economy following disappointing 2023 growth figures.

Hong Kong and Shanghai experienced rare gains after recent losses, although concerns about China’s economic outlook lingered.

On Wall Street, the market closed lower on Wednesday due to robust US retail sales figures for December, despite higher borrowing costs.

The data, coupled with strong readings on consumer prices and jobs creation, indicated the Fed’s intention to maintain elevated rates to curb inflation.

Oil prices saw an increase after Islamabad reported strikes against militant targets in Iran. Tehran, in response, conducted its air raid in Pakistan, resulting in a reported death toll of seven civilians. The United States also carried out additional strikes on Huthi positions in Yemen, escalating concerns about oil and other exports through the Red Sea.

Key Figures around 1200 GMT:

London – FTSE 100: UP 0.2 percent at 7,458.61 points
Paris – CAC 40: UP 0.8 percent at 7,377.65
Frankfurt – DAX: UP 0.6 percent at 16,532.07
EURO STOXX 50: UP 0.7 percent at 4,435.80
Tokyo – Nikkei 225: FLAT at 35,466.17 (close)
Hong Kong – Hang Seng Index: UP 0.8 percent at 15,391.79 (close)
Shanghai – Composite: UP 0.4 percent at 2,845.78 (close)
New York – Dow: DOWN 0.3 percent at 37,266.67 points (close)
Currency and Oil Prices:

Euro/dollar: UP at $1.0893 from $1.0883 on Wednesday
Dollar/yen: DOWN at 147.86 yen from 148.16 yen
Pound/dollar: UP at $1.2688 from $1.2676
Euro/pound: UP at 85.85 pence from 85.84 pence
West Texas Intermediate: UP 1.0 percent at $73.29 per barrel
Brent North Sea Crude: UP 0.2 percent at $78.01 per barrel