Joe Biden has arrived in England for the G7 summit this weekend and his first trip abroad since becoming US president
London (AFP) - European stocks steadied Thursday awaiting the outcome of a monetary policy meeting of the European Central Bank and US inflation data, as traders seek clues over the timing of interest rate hikes.
Traders were tracking also the start of a summit of G7 wealthy nations, ahead of which the United States said it would buy 500 million Covid-19 vaccine doses to distribute among poorer nations.
“This week’s price action in equity markets appears to have been more or less dictated by how big a rise we might see in today’s US (inflation)… as well as how the European Central Bank sees the current outlook for the economy,” noted Michael Hewson, chief market analyst at CMC Markets UK.
With the global economy seeing a blockbuster recovery from last year’s virus-induced collapse, investors are in a broadly buoyant mood with expectations that equities will continue higher thanks to reopenings, vaccinations, government stimulus and vast central bank support.
However, that optimism is being dampened by fears the rebound is causing a spike in inflation that will force banks – particularly the Federal Reserve – to wind back their ultra-loose programmes sooner than previously flagged, despite constant reassurances they will not.
The release Thursday of May’s US consumer price index is now crucial, with warnings that a big miss to the upside of the 4.7 percent forecast would ramp up expectations of policy tightening.
Still, observers said there seemed to be a little more calm on trading floors of late as investors accept the rises would be temporary owing to a lower base of comparison with last year and soaring commodity prices.
Ahead of the US data, the European Central Bank is expected to hold its easy money policy in place, though its post-meeting statement will be pored over for its plans as the recovery develops.
“It will be hard to avoid taper talk so how the ECB responds to questions around tapering will be of central importance to the market’s expectations and the euro,” said Neil Wilson of Markets.com.
Traders were keeping tabs also on relations between Beijing and Washington in the wake of US President Joe Biden’s decision to revoke his predecessor Donald Trump’s executive order against Chinese-owned mobile apps TikTok and WeChat.
It comes as commerce officials from the world’s two biggest economies have held discussions on trade and investment links.
Chinese Commerce Minister Wang Wentao and his counterpart Gina Raimondo “agreed to promote the healthy development of pragmatic cooperation in trade and investment”, during a phone call Thursday.
- Key figures at 1030 GMT -
London - FTSE 100: UP 0.4 percent at 7,106.43 points
Frankfurt - DAX 30: UP 0.2 percent at 15,616.06
Paris - CAC 40: DOWN 0.1 percent at 6,558.78
EURO STOXX 50: UP 0.1 percent at 4,101.85
Tokyo - Nikkei 225: UP 0.3 percent at 28,958.56 (close)
Hong Kong - Hang Seng Index: FLAT at 28,738.88 (close)
Shanghai - Composite: UP 0.5 percent at 6,610.86 (close)
New York - Dow: DOWN 0.4 percent at 34,447.14 (close)
Euro/dollar: DOWN at $1.2163 from $1.2177 at 2030 GMT
Pound/dollar: DOWN at $1.4097 from $1.4112
Euro/pound: FLAT at 86.29 pence from 86.29 pence
Dollar/yen: DOWN at 109.51 yen from 109.63 yen
Brent North Sea crude: UP 0.3 percent at $72.40 per barrel
West Texas Intermediate: UP 0.2 percent at $70.08 per barrel