Europe’s main stock markets climbed higher Thursday, with sentiment buoyed by rising expectations of an imminent interest-rate reduction from the European Central Bank.
Most Asian indices rose, after Wall Street gains, as more soft US jobs data ramped up bets on the Federal Reserve cutting borrowing costs this year.
New York hit fresh records Wednesday after tech darling Nvidia became the third US company to break $3 trillion in market capitalisation after Apple and Microsoft.
The world’s major central banks are meanwhile tilting toward looser monetary policy in the face of slowing inflation, further energising global stock markets.
Canada’s central bank cut its key lending rate by 25 basis points on Wednesday, signalling an end to two years of aggressive monetary policy.
The Frankfurt-based European Central Bank, or guardian of the euro, is widely expected to follow suit with a similar reduction at 1215 GMT on Thursday.
“Today is all about the ECB, with markets pricing in a 25-basis point rate cut,” said Joshua Mahony, chief market analyst at trading company Scope Markets.
“The fact that ECB members have been telegraphing their expectations of a June rate cut over recent weeks does make today’s decision look like a done deal, with the focus likely to be geared towards the outlook for the rest of the year.”
Falling interest rates tend to boost stock markets because they cut commercial loan cost, in turn lifting business and consumer income and expenditure.
Recent data has fanned hopes that the Fed can start to cut US interest rates from their two-decade highs.
Traders have priced in almost two before the end of 2024, with some pencilling in September for the first.
Worries about the world’s top economy appear to have been superseded by renewed optimism that an extended period of elevated borrowing costs is finally kicking in.
Figures Wednesday from payroll firm ADP showed US private-sector hiring slowed far more than estimated in May.
Separate US data this week showed job openings fell more than expected and pointed to a softening labour market, a key goal of Fed officials along with falling inflation.
Investors are now set up for the latest non-farm payrolls report due Friday that should provide a clearer snapshot of the labour market and the world’s biggest economy.
– Key figures around 1000 GMT –
London – FTSE 100: UP 0.3 percent at 8,273.94 points
Paris – CAC 40: UP 0.4 percent at 8,037.86
Frankfurt – DAX: UP 0.6 percent at 18,694.14
EURO STOXX 50: UP 0.6 percent at 5,067.66
Tokyo – Nikkei 225: UP 0.6 percent at 38,703.51 (close)
Hong Kong – Hang Seng Index: UP 0.3 percent at 18,476.80 (close)
Shanghai – Composite: DOWN 0.5 percent at 3,048.79 (close)
New York – Dow Jones: UP 0.3 at 38,807.33 (close)
Dollar/yen: DOWN at 155.97 yen from 156.12 yen on Wednesday
Euro/dollar: UP at $1.0882 from $1.0873
Pound/dollar: DOWN at $1.2784 from $1.2789
Euro/pound: UP at 85.13 pence from 85.00 pence
West Texas Intermediate: UP 0.5 percent at $74.41 per barrel
Brent North Sea Crude: UP 0.3 percent at $78.68 per barrel
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