European stocks rose on Thursday as traders took heart after an overnight rally on Wall Street, and the Bank of England raised interest rates in line with market expectations.
The regional Stoxx 600 in Europe rose 0.1%, recovering from two successive days of declines, driven by the strong performance of the healthcare sector. France’s Cac index increased by 0.3%.
Investors were encouraged overnight by slightly weaker-than-expected US inflation data, bolstering traders’ belief that the Federal Reserve may end its rate-tightening campaign soon.
The tech-heavy Nasdaq Composite added 1% on Wednesday to close at its highest level since June. Lower rates increase the attractiveness of companies that promise long-term growth. Tracking contracts for the S&P 500 and the tech-heavy Nasdaq were both flat ahead of Thursday’s New York open.
London’s FTSE 100 fell 0.4% after the Bank of England raised its benchmark rate for the 12th consecutive time, by 0.25 percentage points to 4.5%, as markets expected.
“Stubbornly high inflation, continued tightness in the labor market and further rate hikes by other major central banks have left the Bank of England with no choice but to raise its interest rate again. benchmark interest,” said Yael Selfin, chief economist at KPMG UK. Traders expect rates to peak at 4.75% in September.
The pound edged higher against the dollar after the news, reversing earlier losses, to trade 0.3% higher on the day at $1.26.
Meanwhile, uncertainty over the US debt ceiling continues to cast a shadow over markets after US Treasury Secretary Janet Yellen warned earlier this month that the government could run out of money as soon as possible. June 1.
Former US President Donald Trump on Wednesday urged Republican lawmakers to let the United States default on its debts unless Democrats capitulate to demands for “massive” spending cuts. The yield on the interest-sensitive two-year Treasury rose 0.02 percentage points to 3.91%, while the yield on the 10-year note was flat at 3.42%.
Asian equities struggled to steer after weak inflation data from China indicated weakening demand, but traders hoped similarly weak US data would support stock valuations. Consumer price inflation in China slowed to its lowest level in two years.
Hong Kong’s Hang Seng lost 0.2%, while Japan’s Topix fell 0.3%. China’s CSI 300 gained 0.1% and South Korea’s Kospi rose 0.4%.
Additional reporting by William Langley in Hong Kong