British stocks closed little changed on Wednesday, as investors take the markets’ growing optimism for rate cuts within 2024 with a grain of salt as central banks stick to a data-dependent strategy for future rate decisions.
The UK’s FTSE 100 index was up 0.03% at closing.
In the eurozone, the latest inflation estimate fueled market watchers’ speculation that monetary policy easing is just around the corner for the European Central Bank, and the US Federal Reserve and the Bank of England are expected to follow suit.
“Inflation is on course to dip below 2% yoy some time in Q3. This supports our call that the European Central Bank (ECB) will go for a first 25bp rate cut in June – followed by equal moves by the US Fed and Bank of England in the same month. But even if, contrary to our expectations, the Fed were to indicate that it wants to wait a little longer before cutting, the inflation downtrend will likely give the ECB the confidence to go ahead,” said Berenberg economist Salomon Fiedler.
“Beyond potential exchange rate effects limited to the short term, the precise sequencing – which central bank starts to cut policy rates a month earlier or later – should not affect broader inflation trends too much,” Fiedler added.
Across the pond, the US private sector economy expanded further, albeit at a slower pace in March, according to S&P Global data. The final S&P Global US Composite PMI Output Index was 52.1 during the reporting month, compared with 52.5 in the previous month.
Meanwhile, in China, the private sector economy grew further in March, with the Caixin General Composite PMI up marginally to 52.7 from 52.5 the month before. It marked the fifth consecutive monthly expansion of Chinese business activity, according to Caixin Insight Group.
Amid a quiet day for news from FTSE 100 constituents, precious metals group Fresnillo was the top riser, gaining 3.66% at closing, while telecommunications holding company BT Group (BT-A.L) logged the steepest decline of 4.60%.
