US stocks hit new records on fresh hopes of easing inflation / Photo: © AFP
US stocks hit new records on fresh hopes of easing inflation
Stock markets rose on both sides of the Atlantic and gold hit new records Thursday as the both the European and US central banks indicated interest rate cuts could be on the way later this year.
On Wall Street, the broad-based S&P 500 and the tech-rich Nasdaq rose 1.0 percent and 1.5 percent, respectively, hitting new highs. The Dow Jones Industrial Average closed 0.3 percent higher.
US markets have seen a bounce midweek, with recent comments from Federal Reserve chair Jerome Powell renewing hopes of a rate cut.
"What we're seeing is continued strong growth, strong labor market and continuing progress in bringing inflation down," Powell told the US Senate Banking Committee on the second day of hearings on Capitol Hill.
The Fed "can and will" begin cutting its key lending rate over the course of this year "if the economy evolves over that path," Powell said during his second day of planned hearings on US monetary policy.
"The market really took Powell's comments positively," Jack Ablin from Cresset Capital told AFP.
"I think the Fed is ready to start cutting -- probably mid year," he added.
"Powell and Company probably want to see the strength in the labor market moderate over the next couple months before starting to reduce rates," said Matthew Weller, head of research at Forex.com.
The European Central Bank kept its rates unchanged for a fourth straight meeting on Thursday, surprising no one.
But the Frankfurt-based institution raised investors' hopes that the battle against inflation is being won by bringing forward its expected timeline for inflation to return to its two-percent target.
"The path for future rate cuts could be in place, after a symbolic cut to both the headline and core inflation forecasts for this year," said Kathleen Brooks, research director at XTB.
- Jobs report ahead -
Friday sees the latest US non-farm payrolls report, which might confirm recent data showing that the labor market remains healthy but appears to be softening.
That would be good news for the Fed, which has been looking to cool the economy and the labor market by hiking interest rates to a 23-year high.
The markets expect February's jobs data to be softer than it was in January, according to Briefing.com.
"Another blowout jobs number tomorrow like the approximately 350,000 in January might raise concerns about the Fed's ability to tame a hot labor market, which can fuel inflation," said Joe Mazzola, an analyst at Charles Schwab.
The Paris stock market's CAC 40 index broke through 8,000 for the first time ever, closing at 8,012.51. Frankfurt's DAX index also closed at a record high.
Gold, a haven investment during times of geopolitical uncertainty, surged to a new all-time peak at $2,164.78 per ounce, before slipping later in the day.
- Key figures around 2100 GMT -
New York - Dow: UP 0.3 percent at 38,791.35 points (close)
New York - S&P 500: UP 1.0 percent at 5,157.36 (close)
New York - Nasdaq Composite: UP 1.5 percent at 16,273.38 (close)
London - FTSE 100: UP 0.2 percent at 7,692.46 (close)
Paris - CAC 40: UP 0.8 percent at 8,015.22 (close)
Frankfurt - DAX: UP 0.7 at 17,842.85 (close)
EURO STOXX 50: UP 1.2 percent at 4,974.22 (close)
Tokyo - Nikkei 225: DOWN 1.2 percent at 39,598.71 (close)
Hong Kong - Hang Seng Index: DOWN 1.3 percent at 16,229.78 (close)
Shanghai - Composite: DOWN 0.4 percent at 3,027.40 (close)
Euro/dollar: UP at $1.0951 from $1.0899 on Wednesday
Dollar/yen: DOWN at 148.07 yen from 149.44 yen
Pound/dollar: UP at $1.2819 from $1.2732
Euro/pound: DOWN at 85.46 pence from 85.58 pence
Brent North Sea Crude: FLAT at $82.96 per barrel
West Texas Intermediate: DOWN 0.3 percent at $78.93 per barrel
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F.Gomez--ESF
