Most Asian and European stock markets fell Thursday following a Wall Street selloff, after the US Federal Reserve poured cold water on hopes for a March interest-rate cut.
The downbeat sentiment was compounded by disappointing earnings from US titans Microsoft and Google parent Alphabet, which pummelled the tech sector.
Fellow heavyweights Amazon, Apple and Meta post their results Thursday.
London’s benchmark FTSE 100 index advanced, however, before a monetary policy decision from the Bank of England, which is expected to maintain its key interest rates as inflation stays high.
The Fed on Wednesday froze its rate for the same reason.
There was brighter news for the eurozone, where inflation slowed in January to 2.8 percent.
The European Central Bank left its rates unchanged at a meeting last week.
– ‘Last thing investors wanted’ –
“All it took was a single sentence from Fed chair Powell to cause equities to stumble,” noted AJ Bell investment director Russ Mould.
“That was the last thing investors wanted to hear,” he added.
Major central banks had raised rates multiple times to combat decades-high inflation. Rates of price rises remains high, however, causing the likes of the Fed and ECB to sit tight.
The Fed on Wednesday said it was unlikely to start cutting “until it has gained greater confidence that inflation is moving sustainably” towards its two percent target. That helped support the dollar.
Powell added after the gathering that “almost everyone” favoured a step down this year, but added, “I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to cut”.
Prior to the news, market bets on a March cut were about 50-50, and observers said the comments were seen as less dovish than expected.
Investors digested also mixed company results Thursday and awaited the outcome of an OPEC meeting. Oil prices were up nearly one percent.
Shares in British energy major Shell jumped three percent as dealers shrugged off slumping annual net profit to focus on better-than-expected adjusted earnings and share buybacks.
Deutsche Bank rallied 4.4 percent after it revealed plans to slash 3,500 jobs following a decline to annual profits.
French banking giant BNP Paribas tumbled eight percent as its struggles in consumer credit and real estate took the shine off a third-straight record annual profit.
– Key figures around 1115 GMT –
London – FTSE 100: UP 0.4 percent at 7,663.39 points
Paris – CAC 40: DOWN 0.7 percent at 7,601.90
Frankfurt – DAX: DOWN 0.3 percent at 16,860.45
EURO STOXX 50: DOWN 0.2 percent at 4,637.48
Tokyo – Nikkei 225: DOWN 0.8 percent at 36,011.46 (close)
Hong Kong – Hang Seng Index: UP 0.5 percent at 15,566.21 (close)
Shanghai – Composite: DOWN 0.6 percent at 2,770.74 (close)
New York – Dow: DOWN 0.8 percent at 38,150.30 (close)
Euro/dollar: DOWN at $1.0801 from $1.0818 on Wednesday
Dollar/yen: DOWN at 146.85 yen from 146.92 yen
Pound/dollar: DOWN at $1.2654 from $1.2688
Euro/pound: UP at 0.8535 from 0.8526 pence
West Texas Intermediate: UP 0.8 percent at $76.48 per barrel
Brent North Sea Crude: UP 0.9 percent at $81.19 per barrel
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