The FTSE 100 (^FTSE) and European stock markets staged a late recovery on Thursday, after spending most of the day in the red, as traders digested the latest interest rate decision from the European Central Bank (ECB) and news of the US economy performing better than expected.
London’s benchmark index closed 0.1% higher, while the CAC (^FCHI) ended 0.05% up in Paris, and the Frankfurt DAX (^GDAXI) was around 0.1% higher.
The US economy expanded more than expected in the fourth quarter of last year, thanks to a resilient jobs market and a boost in consumer spending.
GDP rose at a 3.3% annualised rate, according to the government’s preliminary estimate on Thursday. This beat forecasts of 2.2% growth. Overall in 2023, the economy expanded by 2.5%, its strongest performance since 2021.
Across the pond, US markets with the Dow (^DJI) up 0.3% by the time of the European close, while the S&P 500 (^GSPC) was up 0.5%, and Nasdaq (^IXIC) once again set new record highs with a rise of 0.7%.
Read more: GDP: US economy grows at 3.3% annual pace in fourth quarter, faster than expected
It also came as the ECB’s governing council kept interest rates unchanged as widely expected.
The ECB’s rate on its main refinancing operations, which provide the bulk of liquidity to the banking system, was kept on hold at 4.5%, while its deposit rate, which is paid on commercial bank deposits, is at 4%.
The marginal lending facility, which offers overnight credit to banks, is at 4.75%.
The central bank said: “Tight financing conditions are dampening demand, and this is helping to push down inflation.”
Read more: ECB leaves interest rates unchanged at 4%
President Christine Lagarde said during an interview at the World Economic Forum in Davos this month that rates are likely to be cut in the summer.
Money markets currently have the bank cutting rates four times this year in increments of 25bps, starting in June.
“When looking at the economic performance of the euro area, we’ve seen little in the way of growth since Q3 of 2022, while inflation has also been slowing sharply. Yet for all this economic weakness, a fact which was borne out by yesterday’s flash PMI numbers, especially in the services sector, the ECB has been insistent it is not close to considering a cut in rates, having hiked as recently as last September,” said Michael Hewson, chief markets analysts at CMC Markets UK.
“Only as recently as last week we heard from a few governing council members of their concerns about cutting too early, yet when looking at the data, and the fact that the German economy is on its knees, the ECB almost comes across as masochistic in its desire to combat the risks of a return of inflation.
Read more: Best UK mortgage deals of the week
“In a way it’s not hard to understand given that after November headline inflation slowed to 2.4%, it picked up again in December to 2.9%, while core prices slowed to 3.4%.”
Live21 updates
-
-
-
Investors expect bitcoin price to drop, says Deutsche Bank
Over one-third of participants in a Deutsche Bank survey expect the bitcoin price to drop below $20,000. The recent poll also revealed that a majority of respondents expressed concerns about a potential cryptocurrency collapse.
“We conducted a survey among 2,000 consumers in the US, the UK, and Europe, and despite bitcoin prices hovering above $40,000 for several weeks now, over one-third of our respondents still hold the belief that bitcoin prices will dip below $20,000 by the end of this year,” said the research analysts who compiled the survey.
The analysts said that survey participants had a high level of uncertainty when considering bitcoin’s long-term prospects. “39% of participants believe that it will bitcoin will remain in existence in the coming years, while 42% anticipate its disappearance,” the analysts added.
An analysis of the survey results revealed a significant lack of understanding among participants regarding cryptocurrencies in general. “Two-thirds of consumers possess minimal or no understanding of these digital assets,” the analysts said.
See the full article here or read more: Crypto live prices
-
-
-
-
BoE undecided on digital pound amid privacy concerns
Governor of the Bank of England, Andrew Bailey. REUTERS/Hannah McKay/Pool/File Photo (REUTERS / Reuters) The Bank of England has said it is too early to decide whether to introduce a digital pound currency dubbed Britcoin with 2025 being the earliest for a decision.
The Bank of England and the finance ministry said they would launch further consultations, effectively putting the plan for Britcoin on hold.
“No final decision has been made to pursue a digital pound – also called a central bank digital currency (CBDC).
“Work will continue during the design phase exploring its feasibility and potential design choices,” the BoE said in a statement.
The digital pound is a form of central bank digital currency (CBDC). Unlike existing digital payments, a CBDC is created by the central bank.
-
-
-
-
-
-
Halfords hit by mild weather and Christmas slump
Halfords sign. Credit: Maureen McLean/Alamy Live News (Maureen McLean) Halfords posted weaker-than-expected trading last month, as mild weather and reduced consumer spending hit trading, compared to October and November.
Like-for-like retail motoring sales plunged 15.3%, while overall retail sales were flat in the 13 weeks to 29 December. Cycling and consumer tyres markets performed “significantly worse than anticipated,” the group said. Sales of bikes and accessories slid 1.2% in the quarter.
However, in January sales growth returned to better levels as conditions normalised. The bike and car parts retailer still expects full-year profits to remain on track, assuming markets do not weaken further over its final quarter.
The company is cutting costs of £35m this year, more than previously flagged, and announced a partnership with the specialist tyre distributor Bond International.
Graham Stapleton, the chief executive, said:
Trading in Q4 has begun strongly and we remain focused on everything that we can control, with a number of initiatives underway to achieve further efficiencies within the business, as well as investing in areas where we see real opportunities for future growth.
-
-
-
Wizz Air slumps as losses widen
File photo dated 20/07/11 of passengers getting on a Wizz Air plane at Luton Airport. (Steve Parsons, PA Images) Wizz Air (WIZZ.L) shares plunged as much as 5% as the low cost carrier reported mounting losses amid cancelled flights due to the geopolitical crisis in Israel.
Wizz Air losses widened in the third quarter as the budget carrier grapples with capacity issues tied to engine inspections that have grounded parts of its fleet and the suspension of flights due to the Middle East conflict.
The low-cost carrier reported a loss of €105.4m (£90.20m) in the three months to December, down from a profit of €33.5m the prior year. Operating losses increased by 16%, from €155.5m to €180.4m.
Passenger ticket revenue increased by 19.2% to €553.9m
“Results for 3Q were somewhat disappointing, due to lower-than-expected ancillary revenue,” said analysts at Peel Hunt.
The airline maintained its fiscal 2024 net income expectations after a positive start to its fourth quarter ending March.
-
-
UK the safest country to buy a used car
The UK is the safest country to buy a used car, with vehicles less likely to be clocked or damaged than its European neighbours and the United States.
However, Brits are considering buying some of the oldest used cars in the world, with the average vehicle more than 10 years old, while a fifth of second-hand vehicles have a damage record.
According to analysis by vehicle history checking service carVertical, nearly a fifth of cars that Brits considered buying last year had been damaged, and 3% were clocked.
The UK’s second-hand car market scores the best for transparency. Germany, Switzerland and Denmark also ranked highly for their transparent markets, while Ukraine, Latvia and Lithuania are the most risky countries to buy a second-hand car.
Britain’s high score can be attributed to its very low number of imports.
Safest country to buy a used car (CarVertical) -
Dr Martens hit by US sales slump
Dr Martens boots on display in a shop in Camden, London (DB Pictures) Dr Martens has revealed a hit to its top line in its latest quarter thanks to a poor performance in the US.
But shares in the shoemaker rose 4% on the day as it kept its guidance unchanged, despite revenue falling 21% to £267.1m over the period.
Sales in the Americas were 31% down it said, while in Europe, the Middle East and Africa it declined 15%. In the Asia-Pacific region sales were 8% lower.
Direct to customer sales fell 3% in the three months to the end of December and wholesale revenues tumbled 46%. Overall group revenues were down 18%.
Kenny Wilson, chief executive, said:
Our third-quarter performance is in line with the updated full-year guidance provided in November. Whilst the consumer environment remains challenging, we are taking action to continue to grow our iconic brand and invest in our business.
-
Watch: How does inflation affect interest rates?
Download the Yahoo Finance app, available for Apple and Android.
