By Marc Jones
LONDON (Reuters) – Stock markets and oil were starting to splutter again after the Bank of England’s 12th rate rise in row and dreary Disney+ numbers, but the dollar retained its strength.
The pan-European STOXX 600 index was nearly flat and Wall Street [.N] looked to be in a similar position as data showed a jump in jobless claims. Oil was back in the red too. [.EU][O/R]
Sterling, which has touched a 1-year high this week, was also seeing some profit taking after the Bank of England cranked UK borrowing costs up another quarter point to 4.5%.
“The wording in the statement (is) leaving more room to hike but absolutely no precommitment to do so,” Orla Garvey, senior fixed income portfolio manager at Federated Hermes. “In this sense, as expected, we remain data dependent.”
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan finished down 0.3%, reversing gains in the morning session, as concerns about weak demand in China weighed on sentiment.
China’s April consumer price data rose at a slower pace and missed expectations, while factory gate deflation deepened, suggesting more stimulus may be needed to boost a patchy post-COVID economic recovery.
The consumer price index (CPI) in April rose 0.1% year-on-year, the lowest rate since February 2021, while the producer price index (PPI) fell at the fastest clip since May 2020, declining 3.6% year-on-year.
“Looking ahead, in year-over-year terms, we expect headline CPI inflation to accelerate modestly on continued economic recovery and PPI deflation to persist in the coming months,” Goldman Sachs analysts said in a note.
Markets were also watching the start of three days of Group of Seven (G7) finance leaders meetings in Japan that will seek to tease supply chains away from China – but also try to get its cooperation in solving global debt problems.
Australian shares finished flat, as did Japan’s Nikkei following a blitz of earnings and 16-month high earlier in the week.
China’s blue-chip CSI300 index edged down 0.2%, along with Hong Kong’s Hang Seng.
“While both China’s CPI and PPI data are lower than expected, the market’s reaction to that is not very strong today,” said Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management.
Investors don’t expect further loosening of domestic liquidity in the near future.”
DISNEY SLIDES
With Wall Street futures struggling to hold up [.N], MSCI’s main gauge of global stocks, which is up around 8% this year, was back into negative territory on the day.
Data showed the number of Americans filing new claims for jobless benefits had jumped last week to the highest level since late 2021, suggesting that higher interest rates are now starting to weigh on the labor market.
The U.S. Labor Department’s Consumer Price Index (CPI) on Wednesday showed a 4.9% gain in April, which was just under analyst expectations of a 5% increase.
The Nasdaq had touched its highest in more than eight months, having also been boosted by Alphabet’s latest artificial intelligence plans, but Walt Disney slid 5.7% premarket on Thursday after it revealed a 4 million drop in Disney+ subscriber numbers.
For currency watchers, the dollar was up 0.3% against the major currencies and at 2-month high versus China’s yuan. [/FRX]
Two-year Treasury yields, which typically move in step with rate expectations, inched up as far as 3.9265% compared with a U.S. close of 3.901%.
But the benchmark 10-year Treasury notes were ticking down again as the euro zone’s equivalent – Germany’s 10-year bond yield – fell 3 basis points (bp) to 2.262%, after a 4 bp fall on Wednesday. [GVD/EUR]
In the commodity markets, oil prices buckled after a largely steady morning in London.
Brent crude LCOc1 was down 27 cents, or 0.4%, to $76.14 a barrel at 1200 GMT, while U.S. crude futures CLc1 dipped 29 cents, or 0.4%, to $72.27.
Both contracts are still on track for their first weekly percentage gain in four, while gold hovered just below its recent record high at $2,033 per ounce. [GOL/]
(Additional reporting by Julie Zhu in Hong Kong, Editing by Angus MacSwan and Sharon Singleton)
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