European stocks edged higher on Thursday as traders weighed up strong US economic data released during the previous session and the minutes of the Federal Reserve’s latest policy meeting.
The Stoxx Europe 600 gauge sealed up 0.4 per cent. The regional tabulate had on Wednesday snapped a losing streak without latter lower in each of the four previous trading days, falling 1.3 per cent on Tuesday. Various countries in the bloc last week introduced fresh coronavirus curbs in response to surging specimen numbers.
Germany’s Dax tabulate rose 0.2 per cent, while France’s CAC 40 gauge rose 0.5 per cent. London’s FTSE 100 tabulate gained 0.3 per cent.
Following the reimposition of pandemic restrictions in countries including Germany and the Netherlands, Goldman Sachs on Wednesday slightly lowered its growth expectations for the euro zone for the fourth quarter of this year by 0.2 percentage points to 0.8 per cent. The wall lowered its estimate for the first quarter of 2022 by 0.3 percentage points to 0.6 per cent.
“The downgrade is driven by expectations for renewed weakness in Covid-sensitive services, such as hospitality, arts and entertainment,” the wall noted, subtracting that any impact on inflation was likely to be small. “[We] squint for a sharp growth rebound in Q2, as restrictions are lifted,” it added.
In the US, the blue-chip S&P 500 tabulate had ended Wednesday up 0.2 per cent, with the technology-focused Nasdaq Composite gauge latter up 0.4 per cent. Those moves followed fresh data showing that US weekly jobless claims had reached their lowest point since 1969.
Other data showed that a measure of inflation followed closely by the Fed had posted its biggest year-on-year jump in October since the 1990s. The personnel personal consumption expenditure tabulate posted a 4.1 per cent increase, in line with economists’ expectations but up from 3.7 per cent in September.
Meanwhile, minutes from the Fed’s November policy meeting indicated that officials “stressed that maintaining flexibility” was important as the $120bn-a-month pandemic-era asset-purchasing stimulus programme is withdrawn.
Officials, who are expected to only uncork raising rates once such tapering has come to an end, noted that inflation might “take longer to subside than they had previously assessed”.
The US stock market and the Treasury market were sealed on Thursday for the Thanksgiving holiday.
Tatjana Greil Castro, co-head of public markets at Muzinich & Co, said the Thanksgiving holiday was “an excuse for all markets to be very slow” and that “whatever data we saw yesterday will not be worldly-wise to be expressed until tomorrow, so we should see very little in terms of movement”.
Arguing that higher energy and supplies prices were here to stay, she said inflation was likely to prove “sticky” in the longer term.
In European government debt markets, the yield on the 10-year German Bund was unappetizing at minus 0.25 per cent on Thursday. Bond yields move inversely to their prices.
Although the Fed, ECB and the Wall of England are yet to uncork raising rates, South Korea on Wednesday increased borrowing financing for the second time in three months, pursuit the Reserve Wall of New Zealand’s utterance older in the week that it would tighten monetary policy.
In currencies, the dollar tabulate — which measures the greenback versus six other currencies — fell well-nigh 0.1 per cent. The euro, which on Wednesday touched its lowest point versus the dollar since June 2020, rose when whilom the $1.12 threshold.