European stock markets rose slightly on Thursday as traders weighed the strong US economic data released the previous trading day and the minutes of the Fed’s latest policy meeting.
The Stoxx Europe 600 index closed up 0.4%. After the regional index closed lower in the first four trading days, it ended its continuous decline on Wednesday and fell 1.3% on Tuesday. Last week, EU countries adopted new coronavirus containment measures in response to the surge in the number of cases.
Germany’s Dax index rose 0.2%, while France’s CAC 40 index rose 0.5%. The London FTSE 100 Index rose 0.3%.
After Germany and the Netherlands re-imposed pandemic restrictions, Goldman Sachs on Wednesday slightly lowered its growth forecast for the euro zone in the fourth quarter of this year by 0.2 percentage points to 0.8%. The bank lowered its forecast for the first quarter of 2022 by 0.3 percentage points to 0.6%.
The bank pointed out: “The downgrade is driven by expectations that Covid-sensitive services such as hotels, arts and entertainment will be weak again,” adding that the impact on inflation may be small. “[We] With the lifting of restrictions, growth is expected to rebound sharply in the second quarter,” it added.
In the United States, the blue-chip S&P 500 index closed up 0.2% on Wednesday, and the technology-focused Nasdaq composite index closed up 0.4%. These measures took place after new data showed that the number of initial jobless claims each week in the United States reached its lowest point since 1969.
Other data show that one A measure of inflation It was followed by the Fed in October, which announced its largest year-on-year increase since the 1990s. The core personal consumption expenditure index rose 4.1%, in line with economists’ expectations, but higher than the 3.7% in September.
At the same time, the minutes of the Fed’s November policy meeting showed that with the withdrawal of the US$120 billion monthly asset purchase stimulus plan during the pandemic, officials “emphasize the importance of maintaining flexibility”.
Officials who expect to start raising interest rates only after this reduction is over pointed out that inflation may “take longer than they previously assessed to subside”.
The U.S. stock market and Treasury bond market are closed for the Thanksgiving holiday on Thursday.
Tatjana Greil Castro, co-director of public markets at Muzinich & Co, said that the Thanksgiving holiday is “an excuse for all markets to be very slow” and “any data we saw yesterday will not be expressed until tomorrow, so we should rarely see movement. “.
She believes that higher energy and food prices will continue, but in the long run, inflation may be “sticky.”
In the European government bond market, the 10-year German bond yield was flat at minus 0.25% on Thursday. The bond yield is inversely proportional to its price.
Although the Fed, the European Central Bank and the Bank of England have not yet started raising interest rates, South Korea on Wednesday raised its borrowing costs for the second time in three months after the Reserve Bank of New Zealand announced earlier this week that it would tighten monetary policy. .
In terms of currencies, the U.S. dollar index, which measures the U.S. dollar against six other currencies, fell about 0.1%. The euro-dollar exchange rate hit its lowest point since June 2020 on Wednesday, rising above the $1.12 threshold.
Unhedged-markets, finances and strong opinions
Robert Armstrong analyzed the most important market trends and discussed how the best people on Wall Street respond to these trends.register here Send the newsletter directly to your inbox every business day