Il Nuovo Postiglione - European stock markets climb as eurozone inflation eases

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European stock markets climb as eurozone inflation eases

ECONOMY 01.03.2024

European stock markets climb as eurozone inflation eases / Photo: Richard A. Brooks - AFP

Europe's stock markets climbed Friday as investors welcomed a slowdown in eurozone inflation, while Wall Street opened mixed after setting new records.

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The euro-area annual inflation rate slowed to 2.6 percent last month from 2.8 percent in January on weaker food and drink price rises, official data showed before next week's rate decision from the European Central Bank (ECB).

The print missed expectations of 2.5 percent, but European equity markets still advanced in afternoon trading.

The ECB is under pressure to cut rates after keeping them unchanged since October at a two-decade high.

"With inflation coming in above estimates, traders will be keeping a close eye out for any change in stance from the ECB at Thursday's monetary policy announcement," noted Scope Markets analyst Joshua Mahony.

"While today's data looks unlikely to lessen the chance of a June rate cut, it does dampen any calls for a speedy return to easing in April."

Markets are eagerly following data for a steer on when both the ECB and US Federal Reserve might start cutting their key rates as inflation cools.

Fresh US personal consumption expenditures (PCE) price index figures on Thursday helped shore up confidence that long-awaited Fed rate cuts were likely this year.

The PCE, the Fed's preferred inflation gauge, increased at an annual rate of 2.4 percent in January, down from 2.6 percent in December, the Department of Commerce said.

But the closely watched "core inflation" measure, which removes volatile food and energy costs, increased by 0.4 percent from the month before, indicating an uptick in underlying inflation from December to January.

Easing pressures could move the Fed to begin cutting rates sooner rather than later, although reduction expectations have gradually been pushed to later this year with US inflation holding above the Fed's two percent target.

Despite the unclear data, the tech-heavy Nasdaq Composite index set a new record on Thursday, surpassing a 2021 high, boosted by optimism surrounding artificial intelligence (AI) technology.

The S&P 500 also closed at a record and the blue-chip Dow was also close to its record high.

The Nasdaq and S&P 500 both edged higher at the open of trading on Friday, but the Dow drifted lower.

"Market sentiment remains bullish, and there seems little appetite for profit-taking," said David Morrison, senior market analyst at Trade Nation.

"But the upside momentum has slowed. The major indices are trading sideways and look like they need to consolidate further to build up energy necessary for further gains," Morrison added.

Asian markets mostly rose Friday following Wall Street gains Thursday as key US inflation data met investors' expectations, with Tokyo's benchmark Nikkei index almost touching 40,000 points for the first time.

Shanghai and Hong Kong closed higher and markets in Sydney, Mumbai and Bangkok also rose, as traders shrugged off more downbeat data out of China.

Factory activity in China contracted for the fifth straight month in February, official figures showed Friday, as sluggish demand in the world's second-largest economy continues to drag on growth.

The purchasing managers' index, a key barometer of factory output, was 49.1 percent last month, indicating a contraction in activity.

- Key figures around 1430 GMT -

New York - Dow: DOWN 0.2 percent at 38,937.93 points

New York - S&P 500: UP 0.1 percent at 5,101.42

New York - Nasdaq Composite: UP 0.2 percent at 16,124.62

London - FTSE 100: UP 0.5 percent at 7,670.92

Frankfurt - DAX: UP 0.4 percent at 17,752.83

Paris - CAC 40: UP 0.1 percent at 7,935.86

EURO STOXX 50: UP 0.3 percent at 4,892.77

Tokyo - Nikkei 225: UP 1.9 percent at 39,910.82 (close)

Hong Kong - Hang Seng Index: UP 0.5 percent at 16,589.44 (close)

Shanghai - Composite: UP 0.4 percent at 3,027.02 (close)

Euro/dollar: UP at $1.0816 from $1.0805 on Thursday

Dollar/yen: UP at 150.61 yen from 149.98 yen

Pound/dollar: DOWN at $1.2624 from $1.2625

Euro/pound: UP at 85.65 pence from 85.58 pence

Brent North Sea Crude: UP 1.5 percent at $83.10 per barrel

West Texas Intermediate: UP 1.7 percent at $79.55 per barrel

burs-rl/imm

F.Criscuolo--INP

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