Stocks mixed as traders weigh inflation, positive US data

·4-min read
Investors remain nervous about the spread of the Delta variant, mixed US data, China's crackdowns and the prospect of the Federal Reserve tightening monetary policy

Wall Street and most European stock markets rose on Thursday as traders weighed positive US data, inflation concerns and the economic threat of Covid's Delta variant.

US stocks were up at midday as data indicating an improving labour market and supply chain situation fortified traders worried about the economy's health.

Most European markets closed higher on another day of healthy corporate earnings reports, with aircraft engine-maker Rolls-Royce back in the black in the first half, Siemens seeing quarterly profits triple and mining giant Glencore targeting a $2.8 billion return to shareholders after good half-year results.

But London's benchmark FTSE 100 index was flat after the Bank of England said it could tighten its monetary policy as it warned that inflation will surge to four percent this year, double its target.

The central bank, however, kept its record-low interest rate and emergency stimulus intact for now.

The pound was up against the dollar and euro.

In Asia, Hong Kong and indices in China closed lower.

While central bank officials around the world have largely said spikes in prices are temporary as pandemic-hit economies reopen, investors are betting on interest rates rising sooner than they had earlier expected to keep a lid on inflation.

Markets are looking to see when central banks will also begin to scale back their huge emergency stimulus packages.

Susannah Streeter, senior markets analyst at Hargreaves Lansdown, said a change of course at the BoE in the short term is unlikely.

However, she added, "it does now look like the monetary policy fist may tighten around interest rates earlier than the bank had previously forecast if the economy continues to rebound."

- 'Waiting mode' -

US stocks were up after government data showed new applications for unemployment benefits fell again last week, while the trade balance figures contained hints of an end to supply chain snarls that have driven up prices.

Patrick O'Hare of Briefing.com said investors seemed to have come to terms with the threat posed by the Delta variant, deciding it was not a game changer for the economy, at least not right now.

"The stock market's overall behaviour doesn't connote undue concern about the impact of the Delta variant," he said.

"There is a recognition that it could slow growth some, but there isn't a fear that it will trigger a recession."

Thursday's data came a day after disappointing figures by payroll services firms showed US private hiring in July came in at 330,000, the weakest since February.

Investors are now awaiting official US employment data on Friday, which some analysts had forecast to show a gain of as much as a million jobs.

Federal Reserve Vice Chairman Richard Clarida on Wednesday raised the prospects of the US central bank scaling back its huge stimulus programme and lifting interest rates as soon as 2023.

The ultra-accommodative measures have been a key driver of the rally in global financial markets from their nadir in March 2020.

Clarida said that as the economy emerges from the pandemic, tapering of the quantitative easing scheme could begin later this year, with analysts tipping a possible move in November.

- Key figures around 1545 GMT -

New York - Dow: UP 0.6 percent at 34,984.41 points

London - FTSE 100: FLAT at 7,120.43 (close)

Frankfurt - DAX 30: UP 0.3 percent at 15,744.67 (close)

Paris - CAC 40: UP 0.5 percent at 6,781.19 (close)

EURO STOXX 50: UP 0.4 percent at 4,161.08 (close)

Tokyo - Nikkei 225: UP 0.5 percent at 27,728.12 (close)

Hong Kong - Hang Seng Index: DOWN 0.8 percent at 26,204.69 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,466.55 (close)

Euro/dollar: DOWN at $1.1838 from $1.1841 at 2100 GMT

Pound/dollar: UP at $1.3927 from $1.3891

Euro/pound: DOWN at 85.00 pence from 85.21 pence

Dollar/yen: UP at 109.75 yen from 109.48 yen

Brent North Sea crude: UP 1.0 percent at $71.09 per barrel

West Texas Intermediate: UP 1.0 percent at $68.86 per barrel

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