The FTSE 100 and European stocks bounced back to finish this Thursday mostly higher despite concerns about more rate hikes in Europe and in the US grew stronger amid signs of sticky inflation.
Across the pond, US stocks were mixed as investors digested more big tech earnings and continued to weigh the implications of a recent backup in Treasury yields.
Rates remained a key focus for investors, with the yield on the 10-year Treasury note standing north of 4% after hitting this level on Wednesday for the first time since Nov. 2022. The rise in yields has come as investors brace for more aggressive action from the Federal Reserve in the coming months as inflation stays elevated and the economy remains strong.
In Europe, the eurozone annual inflation rate fell to 8.5% in February, the EU's statistics agency said, but the drop was less than expected as food costs soared.
The consumer price index was down last month from 8.6% in January compared with a year earlier, the European Union's statistics agency Eurostat said.
Euro area #inflation at 8.5% in February 2023, down from 8.6% in January. Components: food, alcohol & tobacco +15.0%, energy +13.7%, other goods +6.8%, services +4.8% - flash estimate https://t.co/Ix24XxTbtk pic.twitter.com/1QHZtzdBs2
— EU_Eurostat (@EU_Eurostat) March 2, 2023
European Central Bank president Christine Lagarde said interest-rate increases may need to persist beyond a planned half-point move in two weeks’ time.
Back in London, Paddy Power owner Flutter (FLTR.L) shares fell 0.89% even as the company managed to slightly cut its pre-tax loss last year after the winter World Cup helped it reach a record number of customers in the last few months of 2022.
Taylor Wimpey (TW.L), one of the UK’s largest housebuilders, dropped 0.68% after it flagged that sales and reservations have weakened this year, as the housing market is cooled by higher interest rates.
CRH (CRH.L), the world’s largest building materials company, has revealed it plans to move its stock market listing from London to New York, in a new blow to the City. Shares surged 7.60% after the announcement.
Meanwhile, Brent crude (BZ=F) bounced back and was trading at around $84/barrel.
A rally in Asian shares sputtered on Thursday, pressured by a pullback in Chinese stocks and higher US yields amid fears the Federal Reserve will keep raising interest rates to combat sticky inflation.
Tokyo’s Nikkei 225 (^N225) was muted and finished at 27,498 points, while the Hang Seng (^HSI) in Hong Kong slipped 0.72% to 20,470. The Shanghai Composite (000001.SS) closed near the flatline, at 3,310 points.
Watch: Stock market ‘starting to catch on’ to risk of sticky inflation: Strategist