European shares opened in the green on Thursday, tracking a bounce on Wall Street as markets adjusted following a rout this week on higher-than-expected US inflation data.
In London, the FTSE 100 (^FTSE) gained 0.7% after a surprise drop in consumer prices did little to calm speculation of a large interest rate hike from the Bank of England next week.
France’s CAC (^FCHI) was 0.4% higher after the opening bell and the DAX (^GDAXI) rose 0.6% in Germany.
“UK markets showed some signs of brief relief, with the flagship FTSE 100 posting moderate gains in early exchanges,” said Richard Hunter, head of markets at Interactive Investor.
“The turnaround was not enough to reverse the declines of the previous day, however, with the index hugging neutral territory for some weeks now. In the year to date, the FTSE 100 has declined by just 1%, underpinned largely by the performance of its largest stocks and elevated commodity prices generally.”
It comes as Britain’s rate of inflation eased in August after registering a double digit increase for the first time in more than four decades last month.
Consumer price index (CPI) inflation unexpectedly fell to 9.9% in the 12 months to August from 10.1% the month before, according to the Office for National Statistics (ONS) on Wednesday.
Read more: UK inflation unexpectedly falls to 9.9% as fuel prices ease
Across the Atlantic, US benchmarks recovered some steep losses from the previous day’s wild session that was spurred by news that inflation in August jumped more than anticipated to 8.3%.
Wall Street’s S&P 500 (^GSPC) advanced 13.32 points, or 0.3%, to 3946.01. The tech-heavy Nasdaq (^IXIC) shot up 0.7%, while the Dow Jones (^DJI) closed 0.1% higher on the day.
Michael Hewson, chief market analyst at CMC Markets, said: “This unexpectedly high number prompted the biggest one day fall for US markets since March 2020, and while US markets did manage to recover some of those losses yesterday, it wasn’t anywhere near enough to repair the damage of the previous day.
“Consequently, the negative sentiment hung over yesterday’s European session like a black cloud as investors mulled the prospect of another big rate rise from the Federal Reserve when they meet next week.
“Yesterday’s PPI number for August was slightly more encouraging in that it showed further evidence of a slowing in the pace of inflation, however its unlikely to be enough to prevent a 75bps move at the very least, with the prospect of further hawkish rhetoric when it comes to further 50bps moves in November and December.”
Asian stocks closed in mixed territory overnight with the Hang Seng (^HSI) leading the way in Hong Kong, closing up 0.6%.
In Tokyo, the Nikkei (^N225) added 0.2%, while the Shanghai Composite (000001.SS) declined 1.2% in mainland China.
Watch: What is a recession and how do we spot?
,,,
